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Pandemic Relief Bill to Lower High Health Plan Premiums

The recently passed $1.9 trillion COVID-19 relief bill provides Americans with $1,400 stimulus payments and $7.5 billion for the Department of Health and Human Services and Centers for Disease Control and Prevention. Funds are earmarked for vaccine education, and clinic and mobile unit operation. The bill also includes a significant change strengthening the Affordable Care Act (ACA).[1]  This ACA provision expands ACA marketplace subsidies temporarily, lowering marketplace premiums by providing health insurance premiums for qualified individuals.[2]

Through this package, there will be a significant expansion of subsidies for health insurance to middle-class and low-income individuals for the next two years. Numerous families struggle to pay their monthly healthcare premiums. With this in mind, the new legislation will fully cover premiums for those making within 150% of the federal poverty level (FPL), which is approximately $19,320 annually. Individuals earning more than 400% of the FPL – approximately $51,000 per year – will be able to purchase healthcare plans on the marketplace, with premiums capped at 8.5% of their income. For example, the monthly premium will drop from $1,075 to $412.50 for an individual making approximately $58,000 a year.[3]

The legislation provides relief for those who purchase health insurance through the exchange, particularly those who have plans with high deductibles and low premiums. An individual with a high deductible may be incentivized not to seek health services due to high initial out-of-pocket costs. With this legislation, approximately 14 million enrollees from the marketplace may pay less by purchasing an entirely different plan from those savings.[4] This change is in response to criticisms of unaffordability, causing individuals to opt to not purchase any health insurance.[5] But with this change, the Congressional Budget Office estimates that approximately 1.7 million Americans would enroll within the marketplace, 1.3 million of which are previously uninsured.[6]

Additionally, under the relief package, those who receive unemployment benefits may be eligible to enroll in the exchange this year. Prior, these individuals were not eligible for subsidies on the exchange. This new bill will cover cost of premiums for those who receive health benefits through COBRA.[7]

In addition to the relief package, President Biden opened a special enrollment period due to the pandemic. Open enrollment typically comes only once a year, in which individuals can purchase a health plan through the marketplace. With this special enrollment period, Americans can now enroll until May 15.[8] Though these changes are temporary for now, lawmakers are expecting these subsidies to become permanent. Others note that improvements may continuously be made, following the original goals of the ACA under the Obama administration. The current legislation proposes narrow improvements but additional provisions regarding premium affordability and subsidies may be explored in the future.

Annie Lee is a Law Clerk at Wilke Fleury.

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  • [5] Id.
  • [6] Id.
  • [7] The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers and their families who have lost health benefits due to loss of job continued coverage at a higher cost.  https://dol.gov/general/topic/health‐plans/cobra
  • [8] Source