American Rescue Plan and Covered California

President Joe Biden signed the American Rescue Plan (ARP) into law last Friday. It expands eligibility for Affordable Care Act (ACA) premium subsidies for those people who have enrolled in Covered California plans. The $1.9 trillion COVID-19 spending package represents the biggest investment in Covered California created by the Affordable Care Act (ACA). ACA made premium tax credits available to people purchasing health coverage through Covered California.  However, tax credits were available for people with income between 100% and 400% of the federal poverty level (FPL).  Under ARP, people at every income level can qualify for premium tax credits.  In addition, for the first time, it has expanded to those with income above 400% of the FPL.

Household Income Less than 150% of the FPL

People up to 150% FPL can now get silver plans for zero premium with reduced deductibles and copays.  Previously, Covered California premium subsidies were partial; no matter how poor, people had to contribute some money toward the cost of the benchmark silver plan.  As a result, low income people now can qualify for free health insurance with enhanced coverage.

Household Income between 150% and 400% of the FPL

Premium tax credits will increase for people at every income level between 150% and 400%.  For example, people with income of 200% FPL had been required to contribute $1,664 toward the cost of the benchmark marketplace plan this year; now under ARP, they will have to contribute just $510.

Household Income over 400% of the FPL

We estimate that there are about 8 million people who either are buying unsubsidized plans before the COVID-19 relief legislation went into effect. This included an estimated 3.4 million uninsured people who fell into the subsidy cliff (i.e. over 400% FPL and no subsidies through Covered California).  Apparently, many people were ineligible to buy subsidized coverage even through Covered California. Under ARP, there is no upper income limit on premium tax credits, meaning that all middle and upper income individuals can qualify for premium tax credits if their premiums exceed 8.5 percent of their overall household income.  By extending eligibility, it lowers Covered California insurance premiums for virtually everyone.

Effective Only For 2021 and 2022

The subsidy enhancements are only effective during 2021 and 2022. These changes to Covered California premium subsidies are temporary, in effect only during calendar years 2021 and 2022. Covered California has not determined the specifics and timeline for implementation of these changes yet. However, once implemented, current enrollees may be able to sign into their marketplace account to increase the amount of advanced premium tax credit (APTC) they receive, thereby lowering their monthly health plan premium payment for the remainder of this year. Subsidies for current enrollees are retroactive to the beginning of 2021 and can also be claimed as tax refunds when people file their 2021 tax return next year.

Need Help with Covered California?

Most likely, the enhanced premium subsidies will be available through Covered California beginning April 1. Under the current special COVID enrollment period, people will have until May 15 to newly sign up for coverage or change plans to take advantage of the additional help.  Skyline Benefit is an official Covered California storefront and certified agency. Our Covered California team can assist you with evaluating your enhanced tax credits and researching the best insurance plan for you and your family. Call today for a free consultation at (714) 888-5116