American Rescue Plan Act Helps With Insurance Premiums
Updated: Apr 4, 2021
By Beth Sufian, J. D.
On March 12, 2021, President Biden signed the American Rescue Plan Act (ARPA) enacted by Congress. The $1,400 individual stimulus payments included in ARPA will help many individuals with CF who are in need of help. Additionally, the healthcare provisions of ARPA will also help some with CF by providing COBRA premium assistance and Affordable Care Act premium assistance.
Nothing in this article is meant to be legal advice and is only information. The ARPA is a brand-new law and there will be additional guidance issued by the federal government in the coming weeks. The information contained in this article is accurate as of March 28, 2021 but information may change after additional federal guidance is issued. Nothing in this article guarantees a payment of COBRA premiums by any entity. Nothing in this article guarantees the amount of premium a person will pay if purchasing an insurance policy of the Affordable Care Act Healthcare Exchange.
If you have questions about laws related to Social Security benefits, Medicaid, Medicare, health insurance, or employment and education rights you can contact the CF Legal Information Hotline at CFLegal@sufianpassamano.com or 1-800-622-0385.
I. COBRA Premium Assistance
ARPA established a new COBRA premium assistance benefit for employees and dependents who, because of a COVID-19-related job loss or reduction-in-hours, became ineligible for employer-sponsored group health benefits.
Under the existing COBRA statute, individuals who are no longer eligible for employer-sponsored group health benefits are permitted to extend their benefits upon certain qualifying events if they make a timely COBRA election and pay monthly premiums. The employer collects the premiums from the individual and may charge up to 102% of the base premium. For many, a COBRA extension of benefits may be the best available option if the person has lost their job. For many who had an employer who had been paying part or all of their health insurance premium the need to COBRA the insurance coverage after job loss typically requires the person pay the full premium. The ARPA changes that for many people.
A. 100% Subsidy Of COBRA Premiums For Up To Six Months.
ARPA provides for a new federal subsidy of 100% of COBRA premiums for up to six months. The subsidy is available beginning April 1, 2021 and ends September 30, 2021. The subsidy is available to individuals who lost their employer-sponsored group health benefits due to a COVID19 related involuntary job loss or reduction of working hours. The ARPA COBRA Premium Assistance benefit is not available for voluntary termination of employment or a voluntary reduction-in-hours.
Under ARPA, the federal government pays the COBRA premium assistance to employers. The COBRA premium assistance pays both the employee and the employer’s portion of the insurance premium if the employer and the employee share the cost of the premium. The subsidy is limited to cost-of-premium assistance. Individuals will still be responsible to pay deductibles, co-pays, and out-of-pocket amounts according to the terms and conditions of the plan.
Because the COBRA premium assistance is paid directly to the employer, the covered individual does not need to apply to the federal government for the assistance. ARPA requires the employer to provide detailed notices to individuals regarding eligibility, amount, and timing of assistance. Generally, an individual’s point of contact for COBRA premium assistance is the employer’s COBRA administrator or the point of contact specified in the employer’s notice of COBRA premium help sent to the individual.
B. Refund Of Premiums If COBRA Premium Assistance Received
However, individuals with COBRA extension coverage should make certain that they are receiving the new federal COBRA premium assistance before they stop paying COBRA premiums. Non-payment of premiums is a legitimate reason for the insurer to stop coverage. Once the COBRA extension coverage is properly discontinued, it generally cannot be restarted.
If a person pays a premium for a COBRA coverage period for which the person is eligible for COBRA premium assistance, ARPA requires the employer to refund the premium payment and apply the COBRA premium assistance to that coverage period.
C. New 60-Day Special Election Period.
ARPA creates a special election period for any individual who did not elect federal COBRA continuation coverage, but who otherwise would have been eligible for the COBRA subsidy. This special election period also applies to individuals who elected federal COBRA continuation coverage but discontinued the coverage before April 1, 2021.
These individuals are allowed an opportunity to elect COBRA coverage within 60 days of receiving the required employer notice. The resulting COBRA continuation coverage begins with the first period of COBRA continuation coverage beginning on or after April 1, 2021.
D. ARPA Does Not Govern State “Mini-COBRA” Laws.
The new ARPA rules apply only to the federal COBRA statute and does not govern state versions of COBRA extension of coverage—often called “mini-COBRA” laws. The federal law applies to employers with 20 or more employees, so smaller employers are not covered by the federal COBRA statute.
E. New Rules Coming
The Department of Labor and Internal Revenue Service will be issuing regulations and guidance regarding the application and administration of the COBRA subsidy provisions of the Act, so there will be additional information in the future regarding the application of the benefits set out in the ARPA.
II. ARPA Expands Affordable Care Act (ACA) Subsidies
The ARPA also makes health insurance coverage purchased from the insurance exchange marketplace more affordable.
A. ACA Premium Tax Credits
The ACA reformed the individual health insurance market in part by creating insurance exchange marketplaces to purchase individual coverage. The ACA also established subsidies for health insurance purchased through insurance exchange marketplaces. These subsidies are often referred to as premium tax credits.
Premium tax credits subsidize the cost of insurance and reduce the amount of premiums paid by individuals. Under the ACA, individuals earning between 100% and 400% of the Federal Poverty Level (FPL) are eligible for a premium tax credit. The amount of the premium tax credit depends on family income, but premium tax credits for ACA health insurance policies are available to many families. The ACA determines the amount of premium that is affordable based on a percentage of the individual’s income. If the insurance premium exceeds the specified percentage of income, the individual receives a subsidy to pay for that part deemed unaffordable.
B. ARPA Expands ACA Premium Tax Credits.
ARPA expands the availability of ACA premium tax credits. During 2021 and 2022, the ARPA increases the amount of the ACA premium tax credits–making the premiums paid by an individual zero in many cases –and expands availability of marketplace premium tax credits to eligible individuals whose income is above 400% of the FPL.
Under ARPA, individuals and families earning up to 200% of the FPL should usually have to pay 0% of their income for health insurance premiums. That means that 100% of premiums for health insurance purchased through a state or federal insurance exchange marketplace will be subsidized during 2021 and 2022.
Individuals with income between 100% and 150% of FPL are eligible for a subsidy equal to the full amount of their premiums. While the amount of the subsidy decreases as income increases, the ARPA makes health insurance more affordable for every person in every income level when they purchase health insurance from a state or federal insurance exchange marketplace.
C. New Credits are Retroactive.
The ARPA premium tax credit changes will be retroactive to January 1, 2021. So, people who purchased health insurance on an exchange this year will receive a refund, if eligible for premium subsidy.
D. New Special Enrollment Period.
On January 28, 2021, the Biden Administration established a new COVID-19 emergency, special ACA enrollment period which began on February 15 and will continue to August 15, 2021. During this special enrollment period, individuals may enroll in health coverage which will become effective on the first day of the month after a consumer enrolls through www.HealthCare.gov.
Beth Sufian, J.D., is 55 and has CF. She is an attorney who focuses her law practice on disability law and is the Treasurer of USACFA. Her contact information is on page 2. You may contact her with your legal questions about CF-related issues at CFLegal@sufianpassamano.com.