For the millions of Americans who lost their employer-sponsored health insurance during the COVID-19 pandemic, some much-needed help is finally here! The American Rescue Plan Act (ARPA), a law signed by President Biden in March, provides additional subsidies for health coverage under the Consolidated Omnibus Reconciliation Act (COBRA) and the Affordable Care Act (ACA).
Around 180 million Americans get health insurance through their employer. During the economic impact of the COVID-19 pandemic, millions of people finding themselves newly unemployed are struggling to afford coverage. In the best of times, finding yourself without health insurance can be difficult. During a global pandemic, it can be terrifying.
After all, a recent survey from healthinsurance.com found over 40% of people would think twice about seeking medical care for COVID-19 due to cost. Fortunately, starting April 1, uninsured individuals and families now qualify for partially or even fully subsidized plans under COBRA and the ACA.
COBRA is always an option for those who unexpectedly lose their employer-sponsored health insurance. It allows employees who were covered by their employer plan to continue to pay the premiums for their health insurance for up to 18 months after employment terminates or their hours are reduced.
However, the portion that an employer previously contributed to the monthly premium now becomes the employee's responsibility. That usually means a substantial increase in cost. Consider that employers contributed, on average, almost $15,000 toward premiums for family coverage in 2019. When a family is left to pick up the full premium tab, in addition to a two percent service charge, COBRA plans can easily cost more than $1,000 a month.
Under ARPA, the federal government will now cover 100 percent of the cost of COBRA plans between April 1, 2021 and September 30, 2021 for those who have been let go since the beginning of the pandemic, or have seen a reduction in hours. While ARPA won’t retroactively cover medical costs before April 1, it does allow individuals to sign up for COBRA to cover expenses after that date, even if they’ve already declined COBRA coverage in the past but are still eligible. Under the law, employers are required to pay the COBRA premiums for these individuals. The federal government will then reimburse employers.
Much like COBRA, ACA plans can also be expensive without subsidies. In 2020, the average premium cost for an individual was $500 a month. For a family of two or more people, it could be over $900. Starting in April, premium tax credit calculations for the Marketplaces on HealthCare.gov will be adjusted “so that most consumers qualify for more substantial advance payments of premium tax credits.”
According to the Department of Health and Human Services (HHS), Americans will see their premiums decrease “on average, by $50 per person per month and $85 per policy per month.” A recent analysis by the Kaiser Family Foundation found that premium tax credits would increase for people at every income level.
It’s not only cheaper to get health coverage right now, it’s also easier. Starting on February 15 and going through August 15, 2021, the Biden administration created an open enrollment period that allows anyone who is uninsured the ability to enroll in an ACA plan, even if they haven’t had a recent qualifying life event. In fact, HHS has announced an additional $50 million in advertising to increase awareness of this campaign.
Long term, the rising cost of healthcare coverage is an issue our political leaders will have to address. But right now, ARPA could provide a much-needed lifeline for American workers trying to get back on their feet after the pandemic.
Jan Dubauskas is a healthcare expert, enthusiastic insurance pro, attorney and mom serving as Vice President of healthinsurance.com
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