Understanding the Improvements in Health Coverage as Part of Biden’s American Rescue Act
The Biden Plan helps millions of Americans get health coverage or get more affordable coverage. Let’s start from the bottom up.
Medicaid Expansion
Twelve states have not adopted the Medicaid expansion for the working poor built into the Affordable Care Act. Most of these are large Southern states like Texas, Florida, Mississippi, Georgia, Alabama, South Carolina, Tennessee, and North Carolina. A few are Midwestern states like South Dakota and Kansas. Wyoming is another hold out. The opposition to the expansion is mostly ideological with a very heavy dose of racism thrown in.
The people who are eligible, but for their state’s opposition to the Affordable Care Act, are parents and other adults with incomes up to about 133% of the Federal Poverty Level (FPL). This is about $17,700 for an individual, about $1480 in monthly income. In some of these states, eligibility is as low as 25% of FPL.
The Biden plan offers these states a 5% increase in their overall Medicaid match if they adopt the expansion. In other words the Biden plan would more than pay for the state’s share of the 90/10 federal/state match for the Medicaid expansion group.
The unemployed
Ten million Americans are out of work due to the Covid Recession. The American Rescue Act would pay for their premiums either through COBRA or the Exchanges. They may also be eligible for Medicaid if their individual or family incomes are low enough.
COBRA is an extension of employment-based health coverage that employers above a certain size must offer to their laid-off workers. Cal COBRA is the same for smaller employers, but it is offered by their insurer, not their employer. Employees typically have to pay 103% of the average cost of their employer’s coverage; this makes COBRA more attractive to older workers with substantial outside incomes or resources. The employee must choose to take COBRA coverage within 60 days of their last coverage. The federal subsidy for COBRA coverage ends on September 30. It appears as if there will be a new open enrollment period to allow the unemployed to access their no cost COBRA coverage,
Exchanges are operated by the state or the federal government for the uninsured and individually insured; there is open enrollment once a year, typically in the fall. There is special enrollment for status changes, such as losing a job, getting married or having a new baby; coverage for status changes is only available if the individual acts within 60 days of the status change. Biden has opened Exchange enrollment for three months ending May 15. The American Rescue Act would provide the unemployed coverage in the Exchanges with no premiums; this is available until the end of 2022, I think. It will require some time to set this provision up administratively.
Exchanges and subsidized coverage
The Exchanges offer coverage for individuals and small employers. They offer a choice of plans and a choice among four tiers of coverage – bronze, silver, gold and platinum ranging from coverage of 60 to 90% of expected medical costs.
Coverage is subsidized in two ways: premium assistance (helps pay for your premiums) and cost sharing reductions (reduces your copays and deductibles when you seek care). Premium assistance cuts out at 400% of FPL under current law. Cost sharing reductions end at 250% of FPL under current law.
The Biden plan will reduce the amounts of money you must pay towards your premiums very considerably. Premiums vary based on age, plan choice, tier choice and the area where you live. Subsidies are calculated so that an individual has a maximum responsibility when choosing a silver plan; they can pay less by selecting a bronze plan or more if they select a gold or platinum level of coverage. People with incomes below 150% of FPL now will pay nothing for silver coverage. People with incomes over 400% of FPL who previously did not receive premium assistance will now qualify so that their total responsibility when purchasing silver coverage does not exceed 8.5% of income. People with incomes between 150 and 200% of FPL will now pay at maximum between 0 and 2% of incomes for silver coverage. People with incomes between 200 and 250% of FPL will now pay at maximum between 2 and 4% of incomes for silver coverage. People with incomes between 250 and 300% of FPL will now pay at maximum between 4 and 6% of incomes for silver coverage. People with incomes between 300 and 400% of FPL will now pay at maximum between 6 and 8.5% of incomes for silver coverage. These changes will help all purchasing through the Exchanges, but will help those aged 50 and older the most because their premiums for their coverage are the most expensive. These changes will become operational quite soon according to some accounts I have read.
If you are insured through the Exchanges already or if you are uninsured or if you are buying individual coverage outside the Exchanges, you should check out the changes on line, as you will see substantial savings.
Table 1: Percent of Income Paid for Marketplace Benchmark Silver Premium, by Income
Income
(% of poverty)
Affordable Care Act
(current law)
House COVID-19 Relief Proposal
Under 100%
Not eligible for subsidies*
Not eligible for subsidies**
100% – 138%
2.07%
0.0%
138% – 150%
3.10% – 4.14%
0.0%
150% – 200%
4.14% – 6.52%
0.0% – 2.0%
200% – 250%
6.52% – 8.33%
2.0% – 4.0%
250% – 300%
8.33% – 9.83%
4.0% – 6.0%
300% – 400%
9.83%
6.0% – 8.5%
Over 400%
Not eligible for subsidies
8.5%
NOTES: *Lawfully present immigrants whose household incomes are below 100% FPL and are not otherwise eligible for Medicaid are eligible for tax subsidies through the Marketplace if they meet all other eligibility requirements.
**In the House proposal, lawfully present immigrants in states that have not expanded Medicaid would continue to be eligible for marketplace subsidies. In addition, people receiving Unemployment Insurance (UI) are treated as though their income is no more than 133% of poverty for the purposes of the premium tax credit. This could extend premium tax credits to some individuals with incomes below poverty.
SOURCE: KFF
Prepared by: Lucien Wulsin
Dated: 3/10/21