Obama Care to Biden Care: New Rules
Posted April 8, 2021
Article written by guest contributor Heather Partin, a Health Insurance Expect with Jeannie Pierce Insurance Agency
On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 (ARP). Before this act, the Affordable Care Act from the 2012 Obama Administration was signed into law, giving consumers greater access to health insurance. Health insurance enrollment no longer had underwriting (denial due to medical conditions). The Health Insurance Marketplace opened, allowing consumers to enroll in insurance based on their income and household size. The ARP has now extended the assistance known as the advanced premium tax credit available to consumers who visit the Health Insurance Marketplace. This extension allows the Marketplace to stay open until August 15, whereas before open enrollment was from November 1 until December 15 each year. The advanced premium tax credits have been restructured to allow more consumers to access affordable coverage without a maximum threshold on adjusted gross income. Before ARP was signed, the top income threshold to receive a federal subsidy was 400% of the poverty level. If a household went above that threshold, they no longer qualified for advanced premium tax credits, causing their premium to be full price. A full-price insurance premium can be more than a household’s mortgage. Under the ARP, the insurance premium through the exchange will not exceed 8.5% of a household’s monthly income when the adjusted gross income exceeds 400% poverty level.
Now there are still regulations to qualify. The minimum threshold of 100% Federal Poverty level still must be met to qualify. Medicaid is a state-run government program, so there is the option for the State to extend Medicaid to consumers whose income does not reach 100% FPL. North Carolina has adjusted Medicaid guidelines, however to what degree is unknown at this time. People who have lost their jobs due to COVID-19 related issues can now receive more stimulus money to their unemployment package and will be required to claim that as income on their application for Advanced Premium Tax Credit.
Another benefit included in the ARP is assistance to pay for COBRA coverage offered to large group employees that involuntarily lost their job due to the impact of COVID-19. COBRA is a continuation of coverage that the employer group must offer to prior employees equivalent to the employee’s coverage while employed. COBRA coverage would be the full cost of the premium that the employee shared with the employer, which can get expensive. The prior employee has the ARP option to apply for assistance to help pay up to 100% of the COBRA premium. This assistance is offered from April 1, 2021, to September 30, 2021. If someone lost their job due to COVID-19 and it has not been within the last 30 days, the insurance carriers offer this COBRA coverage back up to the prior employee. Often a COBRA premium will be considered not affordable to the consumer giving them the option to apply for coverage on the Health Insurance Marketplace and qualify for an advanced premium tax credit.
Finally, the ARP has given forgiveness to those consumers that have income changes in 2020. Since income has been so unpredictable due to COVID-19, the IRS has decided to waive any advanced premium tax credit that the consumer technically did not qualify for once the reconciliation process occurs. Before the ARP, if a consumer’s income exceeded the projected income on the application, a reconciliation process took place, and the consumer would pay back the difference, a capped amount based on FPL and household size, or all the APTC if the income exceeded the maximum threshold of 400% FPL.
Finally, the ARP has given forgiveness to those consumers that have income changes in 2020. Since income has been so unpredictable due to COVID-19, the IRS has decided to waive any advanced premium tax credit that the consumer technically did not qualify for once the reconciliation process occurs. Before the ARP, if a consumer’s income exceeded the projected income on the application, a reconciliation process took place, and the consumer would pay back the difference, a capped amount based on FPL and household size, or all the APTC if the income exceeded the maximum threshold of 400% FPL.
The American Rescue Plan of 2021 has ultimately given health insurance coverage to more consumers at a more affordable rate. However, if a consumer has access to a group employer plan, Medicare, VA Benefits, Tricare, Medicaid, CHIP, or any other plan deemed to meet the minimum essential coverage guidelines, then the advanced premium tax credits (APTC) are still not available to them. The consumer can purchase insurance directly through the insurance carrier; however, the premium will most likely be higher than the other insurance options available. Suppose a consumer is already on the Health Insurance Marketplace. In that case, consumers are advised to resubmit their application to receive more of the APTC awarded to them, with this restructuring of APTC being effective 4/1/2021. As of right now, Biden Care is in effect for Plan Years 2020 and 2021, yet if we keep trending, these new regulations may be in force for more years to come.
Heather Partin | heather@jeanniepierceinsurance.com | 828-328-8472 | Health Insurance Agency, Hickory, NC | Jeannie Pierce Insurance Agency
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