Guiding your life’s biggest financial moments

Personal Finance

The Stimulus Plan also has health insurance benefits

Kiplinger logo

When President Biden enacted the American Rescue Plan Act in March, the focus was on stimulus payments, and for good reason: $ 1,400 is not to be sneezed at, especially if several people in your household are eligible to receive a check. But depending on your situation, other provisions of the $ 1.9 trillion stimulus bill could be worth even more than $ 1400, especially if you need health insurance.

Health insurance for early retirees. Working longer is one of the most effective ways to make your retirement nest egg last (see The Benefits of Working Longer), but not everyone has this option. And if you quit your job before age 65, you’ll likely need to purchase a health insurance policy that will cover you until you’re eligible for Medicare. The Affordable Care Act ensures that you can buy an ACA policy from the market, even if you have pre-existing health conditions. But in the past, premiums for many people in their 60s have been high, often exceeding $ 1,000 per month. Health care experts claim that the high cost of ACA plans has led some seniors to purchase short-term policies that are cheaper but often lack the protections and coverage guaranteed by ACA plans.

Now, people who have avoided ACA plans or are paying high premiums to get one, will get some relief. The American Rescue Plan dramatically expands eligibility for ACA grants, lowering premiums for individuals at all income levels and eliminating them altogether for some households. If your estimated modified adjusted gross income for 2021 is between 100% and 150% of the federal poverty level ($ 17,420 to $ 26,130 for a two-person household), you will be able to get enhanced silver-level plans at no cost, says Jon Andrews, Managing Director, Individual Market, for Willis Towers Watson, an employee benefits consulting firm. (In general, Bronze plans have the lowest premiums and highest deductibles, Platinum plans have the highest premiums and lowest deductibles, and Silver or Gold plans fall somewhere in between. )

Those whose income in 2021 is between 150% and 400% of the federal poverty level will see a significant drop in premiums, and households whose income exceeds 400% of the FPL – $ 69,680 for a two-person household – will benefit from the biggest drop. in cost, because the amount they pay in bonuses is capped at 8.5% of their MAGI.

For example, a 63-year-old couple with a MAGI of $ 70,000 will each pay about $ 496 per month for a silver plan, which is about half of what they would pay without the cap, Andrews says. “Almost all early retirees who buy health insurance through public scholarships will see their costs drop,” he says.

The Kaiser Family Foundation has a calculator that you can use to estimate the cost of a money plan, based on your estimated income.

To give individuals time to take advantage of the new grants, the Centers for Medicare and Medicaid Services have extended the 2021 enrollment period for ACA plans until August 15.

You can request a new plan or update the one you have at Unless Congress extends them, grants will expire in 2022.

Unemployed workers. Redundant workers don’t just lose their wages; they often lose their health insurance as well. The Consolidated Omnibus and Reconciliation Act (COBRA) requires companies with 20 or more employees to allow departing employees to keep their coverage for up to 18 months, but they are usually required to pay the full premium, including the amount previously paid by the employer. This makes COBRA unaffordable for most of the unemployed.

As part of the US bailout, however, the government will subsidize 100% of COBRA premiums between April 1 and September 30 for employees who lost their coverage because they were made redundant or had their hours cut. The federal government will reimburse employers for the cost of the subsidies.

If you lost your job before the law passed and are still eligible for COBRA, you can sign up to receive subsidized coverage until September, says Debbie Harrison, director of regulatory and government affairs for the Business Group on Health, a non-profit organization that represents large employers. You may also be eligible for the grant if you signed up for COBRA and then dropped out before your eligibility ended. However, the grants will not apply to expenses you incurred before April 1, and you are not eligible for the grant if you voluntarily left your job.

While the window to claim subsidized COBRA premiums is narrow, even a few months of coverage could make a huge difference for unemployed families, says John Barkett, senior director of political affairs for Willis Towers Watson. Without the subsidy, COBRA premiums can cost a family $ 2,000 a month or more, he says. Maintaining COBRA coverage also means you’ll be able to keep your health care providers, an important consideration if a family member suffers from a chronic illness.

You may also like...

Leave a Reply