The federal stimulus package could extend health insurance or reduce the cost of insurance to millions of Americans by expanding Affordable Care Act tax credits and subsidizing COBRA coverage.
Despite unprecedented job losses during the coronavirus pandemic, the number of people who are uninsured has not increased dramatically — largely due to Affordable Care Act protections. Medicaid enrollment has soared, especially in states that expanded eligibility under the health-care law.
People who earn too much to qualify for the publicly funded health program have turned to ACA-created marketplaces, where the vast majority qualify for a reduced-cost premium.
“Around the beginning of the Trump administration, the conversation was about repealing the Affordable Care Act,” said Krutika Amin, an associate director at Kaiser Family Foundation. “During the pandemic, the Affordable Care Act has really served as a safety net.”
The federal stimulus bill approved by the Senate on March 6 bolsters that safety net by increasing the size of marketplace tax credits and expanding who is eligible for one in 2021 and 2022.
Tax credits vary, based on age, location and income level. Currently, people are eligible for tax credits only if their annual income is within 400% of federal poverty, about $51,000 for an individual. The bill eliminates the income cap, making more people eligible for a reduced health insurance premium, the amount you pay per month for the plan.
The bill also relieves people of having to pay back tax credits they received in 2020 if their income ended up higher than they estimated during enrollment — a problem analysts say will be common for marketplace shoppers whose income was unpredictable and fluctuated significantly during the pandemic.
The changes would have the greatest impact for older adults, for whom insurance prices rise dramatically when they are not eligible for tax credits.
For instance, a 60-year-old with $55,000 annual income would pay $390 a month for a middle-range health plan with the stimulus bill’s enhanced tax credits, compared with $887 a month now, according to analysis by the Kaiser Family Foundation.
“Folks who make more than $50,000, those folks really struggle with high premium costs and the ACA was often out of reach for them,” said Antoinette Kraus, director of Pennsylvania Health Access Network, which helps people enroll in health insurance. “It really opens the door for people who don’t get health insurance through an employer.”
Jason Piperberg, a Philadelphia freelance illustrator, is currently covered by a bronze health plan through Pennie, Pennsylvania’s insurance marketplace. Plans are graded by “metal level” with bronze plans offering the cheapest monthly premium, but higher out-of-pocket costs. Silver, gold and platinum plans are increasingly expensive with greater coverage.
Piperberg, 31, is eligible for a tax credit that covers the cost of his plan’s premium, but coverage would be expensive if he ever needed to use it — the plan has an $8,000 deductible.
“It’s not great,” he said. “It’s the choice between am I going to pay a bunch of money for insurance I’m not going to use or have a high deductible?”
Piperberg plans to look into whether he may be able to afford a higher-quality marketplace plan with the stimulus bill’s enhanced tax credits.
The federal ACA marketplace — as well as state-based marketplaces such as Pennie and Get Covered NJ in New Jersey — are open for a special COVID-19 enrollment period through May 15.
The enrollment period is intended to give people who have lost coverage during the pandemic a chance to sign up, but people who have already selected a plan for 2021 are also able to change their plan.
Some laid-off workers may not have to seek out a new plan at all. The stimulus bill would also subsidize the entire cost for workers eligible for COBRA coverage to stay on their employer’s health plan for 18 months.
Laid-off workers who had health insurance through their employer are often eligible for COBRA coverage, which allows them to stay covered by the plan if they pay the full premium — including the portion previously covered by their employer. COBRA coverage is under-used because it is often too expensive for people who’ve just lost their job, but is an important option for people who have chronic or acute health conditions and need to maintain coverage, said Eliot Fishman, senior director of health policy for Families USA, a consumer health care advocacy organization.
With health care and insurance already top financial burdens for families, the new COBRA rules will ensure families are covered at a critical time, he said.
“It transforms the situation in terms of health care cost for unemployed people, and given the really unprecedented number of unemployed people right now, we need that,” he said.