The American Rescue Plan Act, also known as the COVID-19 Stimulus Package, was passed on March 11, 2021. This $1.9 trillion economic stimulus bill was drafted to speed up recovery caused by the COVID-19 pandemic. The bill may affect your personal health insurance and/or the way you offer health insurance to your terminated or laid off staff.
Changes to Group Insurance Plans
In this relief package, there is no financial assistance on group insurance plans for employers. If you have been hit hard by the pandemic, it may be beneficial for both you and your staff to transition to the individual market. If you are thinking about making those changes, there are a few key points to consider. First, the individual market does not offer the same robust large network plans and is only less money if you are subsidized.
Subsidies are tax credits that function like a coupon. The 2021 subsidies are deeper, meaning larger and more money off. They are also wider, which means more people qualify. This transition is a good option if your staff members are comfortable with a small network or HMO and are making less than $80K yearly. Additionally, those that are 55+ will see a larger benefit from the transition. Young staff do not fair well on the rates in the individual subsidized market. This would be a large change to move from group to individual and needs to be done strategically for a win-win for both employer and employee.
COBRA and IL Continuation are now covered 100% by the government from April 1 - September 30 if employment was terminated by the employer and not employee. COBRA needs to be proactively offered or re-offered in the following situations. Employees that were involuntarily terminated or moved to part time in the past 18 months are eligible. Qualifying employees who are already enrolled on COBRA or IL Continuation will receive free benefits from April 1 - September 30. As an employee you need to notify your employer of your interest in this option. As an employer you need to proactively offer this option. Employees that did not originally elect COBRA or IL Continuation get a new opportunity to enroll. An employee can elect to start April 1st (meaning not at the date of original termination) and continue through September 30th and that be the only time they are enrolled. If the employee qualifies for COBRA April 1st or later the free COBRA or IL Continuation continues through September 30th.
Changes to Individual Insurance Plans
Individual insurance plans can be purchased on and off exchange. On exchange plans are the options accessed through healthcare.gov. Healthcare.gov is used to get a subsidy, or a tax credit, that you take up front and functions like a coupon. There are some key changes to the subsidies from the relief act.
If you are getting unemployment wages during any time in 2021 you have access to 100% subsidised insurance. Depending on your unemployment wages this could be Medicaid or a policy with a carrier.
Subsidies are deeper. If you are currently subsidized you can be more subsidized.
Subsidies are wider. More folks now qualify for subsidies which means you could make more money and still get the financial assistance. You can only spend up to 8.5% of your income on your insurance which means many more folks will qualify for financial assistance, especially those 55+. This is because the rates are very high for more elderly individuals.
You must be on exchange to access a subsidy. If you are off exchange it might make sense to move to on exchange. If any of these changes apply to you, contact us for additional assistance!