The American Rescue Plan and the Health Insurance Marketplace

President Biden signed the American Rescue Plan Act of 2021 (ARP) into law on March 11, 2021.  ARP makes major improvements in access and affordability of health coverage through the Health Insurance Marketplace by increasing eligibility for financial assistance to help pay for Marketplace coverage.

Under the new law, many people who buy their own health insurance directly through the Marketplace will become eligible to receive increased tax credits to reduce their premiums.  Starting April 1, 2021, consumer enrolling in Marketplace coverage through Healthcare.gov will be able to take advantage of these increased savings and lower costs.

For consumers who are eligible for premium tax credits, a family’s credit amount is calculated based on the following factors:

•  Household’s total expected income for the year

• Total number of people in the household that files taxes together

• The premium amount of the second-lowest Silver plan in the consumer’s area in the Marketplace.  This is the “benchmark” plan cost used to calculate premium tax credits.  It’s not related to which plan a consumer actually chooses to enroll in.

Current enrollees can update their applications and enrollments in order to get new eligibility results starting April 1st.  Consumers will need to reselect their current plan in order for the changes to take effect to reduce their premiums for the remainder of the year.

Consumers who need coverage starting April 1st should still apply and select a plan by the end of March through the Special Enrollment Period (SEP) so coverage can start April 1st.  Then to get the added benefits, submit the application again and re-select your plan to have the increased tax credits applied for coverage for May 1st forward.

If consumers do not take action, they will still receive the additional benefit as part of their premium tax credit when filing their federal income tax return next year.Beginning April 1st, consumers must go back to Healthcare.gov to update their application in order to receive these increased tax credits for this year.