Healthcare Stimulus Package for Workers?

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The American Rescue Plan Act was signed into law by President Biden in March. Much of the attention was focused on the stimulus payments. Especially if there are multiple eligible people in your household, $1,400 is not something to be sneezed at. However, depending on your situation, additional provisions in the $1.9 billion stimulus bill may be worth more than $1,400, especially if you require health insurance.

Early retirees can get health insurance. While working longer is a great way to build your retirement nest egg, not everyone has that option. If you are 65 or older and you quit your job, you will need to purchase a policy for health insurance that will protect you until you become eligible for Medicare. You can purchase a policy through the ACA marketplace even if your pre-existing conditions are covered. In the past, premiums for people over 60 were high, sometimes exceeding $1,000 per month. According to health care experts, the high cost of ACA plans has caused some older people to purchase short-term policies. However, these policies often do not provide the coverage and protections that ACA plans offer.

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Individuals who have opted out of ACA plans or paid high premiums to be enrolled in one will now get some relief. The American Rescue Plan dramatically expands eligibility for ACA subsidies. It lowers premiums for all income levels and eliminates some for certain households. Jon Andrews, managing direct, individual market, at Willis Towers Watson, a benefits consultancy firm, said that if your modified adjusted gross income for 2021 falls between 100% and 150% (for a two-person family, $17,420 to $26,130), you will be eligible for enhanced silver-level plans for no cost. The lowest premiums and highest possible deductibles are generally found in bronze plans, while platinum plans have the highest premiums but the lowest deductibles. Silver and gold plans are somewhere in the middle.

Premiums will drop for those who earn between 150% and 400% of federal poverty level in 2021. Households with incomes above 400% of FPL ($69,680 per household) will also see significant drops in premiums. The premiums they pay are capped at 8.5% their MAGI.

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Andrews states that a couple of 63-year olds with MAGI of $70,000 would each pay $496 per month for a silver plan. This is roughly half the cost they would have paid without the cap. He says that almost every early retiree purchasing health insurance through the public exchanges will see his costs drop.

A calculator provided by the Kaiser Family Foundation allows you to estimate the cost for a silver plan based on your income.

To allow individuals to take advantage the new subsidies, Centers for Medicare & Medicaid Services have extended the 2021 enrollment period for ACA Plans until August 15.

You can either apply for a new or update your existing plan at healthcare.gov. The subsidies will end in 2022 unless Congress extends them.

Workers who are unemployed. Layoff workers often lose their healthcare insurance as well as their paychecks. Companies with 20 or more employees must allow their employees to continue their coverage for up 18 months. However, they are usually required to pay all premiums, including any amounts previously paid by the employer. This makes COBRA prohibitively expensive for many unemployed workers.

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The American Rescue Plan will however subsidize 100% of COBRA premiums for employees who are laid off or have their hours reduced under the American Rescue Plan. Employers will be reimbursed by the federal government for the cost of these subsidies.

If your job was terminated before the law was passed, and you are still eligible for COBRA coverage, you can sign-up to receive subsidized coverage until September. Debbie Harrison, director for regulatory affairs at the Business Group on Health (a non-profit that represents large employers), said that you can register for subsidized coverage up through September. If you were enrolled in COBRA but then dropped it, you may be eligible for the subsidy. The subsidy won’t cover any expenses incurred prior to April 1 and you are not eligible if your job was terminated.

Although the window to claim subsidized COBRA premiums for coverage is very narrow, even just a few months could make a big difference for unemployed families, John Barkett, senior director for policy affairs at Willis Towers Watson, said. He says that COBRA premiums without the subsidy can run to $2,000 per month for a family. If you have a chronic condition, keeping COBRA coverage will allow you to continue your care.

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