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Health insurance is on sale at a steep discount thanks to the latest COVID-19 relief law

The American Rescue Plan Act eliminated monthly premiums for many lower-income families and made higher-income families eligible for subsidies for the first time.

The American Rescue Plan Act, signed in March, expanded health insurance subsidies. (Dreamstime/TNS)
The American Rescue Plan Act, signed in March, expanded health insurance subsidies. (Dreamstime/TNS)Read moreDreamstime / MCT

The federal government is running a big sale on health insurance.

The American Rescue Plan Act, the latest effort out of Washington to lift the economy out of the COVID-19 doldrums, boosted subsidies, making it cheaper for more people to buy plans on Affordable Care Act insurance marketplaces.

“The savings are huge,” said Joanna Rosenhein, a specialist at the nonprofit Pennsylvania Health Access Network who helps people buy insurance. “We see people saving hundreds of dollars a month. Some people are now paying zero dollars per month, whereas before they were $100 or more.”

In Pennsylvania, the price cuts are automatic and will show up in the monthly bills consumers receive for July. The lower rates are also retroactive to the beginning of the year in Pennsylvania. Consumers will receive a credit for higher premiums they paid since the beginning of the year.

Most workers get insurance through their employers. But individuals can buy plans on the online insurance marketplaces established after the 2010 Affordable Care Act.

Uninsured Pennsylvanians have until Aug. 15 to sign up for insurance this year. And the extended enrollment period runs into November in New Jersey. The higher subsidies are available nationwide for the remainder of this year and next year., which is Pennsylvania’s new online marketplace for health plans, and GetCoveredNJ at display information on the new subsidies prominently.

Pennie implemented the American Rescue Plan changes on April 16. Through Wednesday, about 30,000 existing consumers in the state had taken early advantage of the new law’s savings by reentering their sign-up information. And about 16,500 new customers have joined, a Pennie spokesperson said.

In April, Pennie officials estimated that 270,000 Pennie customers will eventually receive savings under the new law. Some will see their premiums disappear entirely.

Under the old rules, for example, a family of four with $39,750 in annual income could have paid as much as $137 a month for insurance, or $1,644 yearly. The new law knocked the premium down to zero.

Another major change brought by the American Rescue Plan is that higher-income individuals and households are eligible for subsidies. The new law says that no one should pay more than 8.5% of income on health insurance.

This means that a family of four (two adults in their 40s with two children) living in Southeastern Pennsylvania with a household income of about $125,000 a year will be eligible for a subsidy, or voucher, of $667 a month, according to Independence Blue Cross, the region’s largest health insurer.

“For people who are already subsidized, the amount of their voucher has gone up considerably, and for people who thought they couldn’t get any help, that’s not the case right now,” said Paula Sunshine, senior vice president and chief marketing executive at Independence.