The American Rescue Plan (ARP) was recently passed to reduce health care costs, expand access to coverage, and ensure nearly everyone who buys their own individual or family health insurance through a Marketplace can receive a tax credit to reduce their premiums. The following is a breakdown of what it means to you.
A New Open Enrollment Period Now Through May 15th
*New enrollees can enroll in a plan without providing proof of a special election period
*Current enrollees can make changes to their existing plan
*Coverage will start the first of the month after plan selection
The new law will lower premiums for most people who currently have a Marketplace health plan and expand access to financial assistance for more consumers. This means that if you made too much, you may now actually qualify for assistance.
In order to take advantage of the savings immediately, you must revisit your application via healthcare.gov. If processed this month, premiums will be lowered effective 5.1.
Consumers who enrolled in Marketplace plans prior to April 1 have the choice of waiting until they file their taxes next year in 2022 to receive the additional premium tax credit amount when they file and reconcile their 2021 taxes.
The increased subsidies are retroactive to 1.1.21.
Explanation on How the Premium Tax Credits Work
For consumers who are eligible for premium tax credits, an individual or a family’s tax credit amount is calculated based on the following factors:
Household’s total expected income for the year
Total number of people in the household that file taxes together
The tax credit calculation uses a percentage of the household’s income that they need to contribute (spend) on monthly health insurance premiums.
Prior to the American Rescue Plan, households had to contribute up to 9.83% of their income to pay for health insurance premiums to be eligible for tax credits. Consumers can choose to enroll in plans that cost more or cost less than the benchmark plan. Households with incomes greater than 400% FPL weren’t eligible for tax credits to help reduce the cost of purchasing a Marketplace plan.
Since passing the American Rescue Plan, individuals and families may be eligible for a temporary increase in premium tax credits for this year and next, with no one paying more than 8.5% of their household income towards the cost of the benchmark plan or a less expensive plan. Meaning, many consumers will be eligible for higher tax credit amounts to help cover their health plan premiums.
Additional Changes
People who were involuntarily terminated April 1st-September 30th and offered COBRA will have their premiums covered for FREE until September 30, 2021.
People can not take the COBRA subsidy if they are now eligible for other coverage (including new group plan or Medicare)
Taxpayers who received unemployment compensation during any week beginning in 2021 may be eligible to receive additional premium tax credits to help pay for 2021 Marketplace coverage. -This part of the plan is not available at this time, but is estimated to be available by summer.
People who underestimated their income in 2020 won’t have to pay back the APTC when they file their taxes. No word yet what happens to those that have already filed and paid. I suggest contacting your accountant for more information.
Bright Health is a new provider that will offer plans via the Marketplace. Their network consists of Palos Medical Group and the Adventist network.
NO penalty continues! This means you will not receive a penalty for not having coverage or for obtaining a plan that does not provide the 8 coverages required by the Affordable Care Act.
Blue Cross Blue Shield and Cigna will continue to offer virtual visits. While Blue Cross Blue Shield only offers this service to their PPO plans, Cigna will offer the same service on all of their plans. Policy holders can call or chat online with a nurse practitioner to obtain a diagnosis and prescription for medication.
Carriers continue to waive cost sharing and co-pays related to COVID 19 testing and treatment. You MUST select an in-network provider/facility.
Northwestern Memorial will now accept plans from Cigna (Connect HMO). They will continue to accept Blue Cross Blue Shield (Blue Precision HMO and Blue Care Direct HMO).
Out of pocket maximum will increase to $8,500 per person. You can offset this by purchasing an accident or critical illness rider. The rider starts at $25 per month and provides coverage to you in the event of an accident or diagnosis of a critical illness (heart attack, cancer, or stroke).
Group plans are still an option for small employers. Blue Cross Blue Shield and now Humana offer relaxed guidelines during this time to allow for a 1-person group. The employer must have at least 2 full time employees that are not husband and wife. The employees can be 1099’d.
How to Avoid Rate Increases
Be prepared to discuss your household, estimated adjusted gross income for 2021. This will be used to determine if you qualify for assistance.
Those without pre-existing conditions should consider a short term medical plan. These plans do not provide coverage for pre-existing conditions, maternity, and limited wellness visits. However, these plans are a fraction of the cost of plans offered through the Marketplace and they all have a PPO network.
If you are going to opt to self-insure, protect yourself with an accident or critical illness plan. The plan works separate from health insurance and pays you based on a diagnosis of a critical illness (cancer, heart attack, or stroke) and in the event of an accident (slip, fall, and break an ankle) the plan will pay you a certain dollar amount. The purpose is to use the funds to pay towards the unexpected hospital or urgent care visit.
Review ALL of your insurance policies. I specialize in personal lines insurance, which includes auto, home, and Medicare. As a broker, I have access to multiple carriers which allows me the opportunity to find the best plan based on your needs. I’ve saved people thousands by reviewing rates with multiple carriers.
Questions
Questions
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