The American Rescue Plan and your Colorado health insurance

You may have seen headlines recently about how the American Rescue Plan (HR1319) makes health insurance more affordable for people who buy their own coverage. As always, you can reach out to me if you have questions about your specific circumstances. But I wanted to summarize some general information:

• Section 9662 of the American Rescue Plan: If you would have had to pay back excess premium tax credits from 2020, you no longer need to do so. If you’ve already filed your 2020 tax return and repaid some or all of your premium tax credit from 2020, the IRS is advising that you hang tight and wait for more information (ie, they say people should not file an amended return at this point in order to recoup that money). Note that you can still get additional premium tax credits while you file your taxes, if the amount that was paid on your behalf last year was too small. But if it was too big, you don’t have to repay any of it. This is a one-time repayment holiday, for 2020 only.
• Section 9661 of the American Rescue Plan makes coverage more affordable this year and next year. I’ll cover some examples of this in more detail below. But in general, people with income over 400% of the poverty level can qualify for premium tax credits if the benchmark plan costs more than 8.5% of their income. And people with income below that level can qualify for larger premium tax credits than they currently receive. People with fairly low income (up to $25,860 for a household of two, for example) can qualify for a Silver plan with $0 premium and robust cost-sharing reductions. 
• Section 9663 of the American Rescue Plan allows people receiving unemployment compensation in 2021 to enroll in a $0 premium Silver plan with robust cost-sharing reductions. You have to be otherwise eligible for premium subsidies, which means you can’t be eligible for Medicaid or an employer-sponsored plan that’s considered affordable. But otherwise, regardless of how long your unemployment benefits last in 2021, and regardless of how much you actually earn, you’ll qualify for premium subsidies as if your income is just over the lower threshold for premium subsidy eligibility. In 2021, that means you pay nothing for the benchmark Silver plan, and you get full cost-sharing reductions, which make the plan’s benefits more robust than a normal Platinum plan.
  Connect for Health Colorado interprets the statute to include dependents. So even if you only have a dependent in the household who has received unemployment benefits, the entire household will qualify for the $0 premium Silver plan with maximum cost-sharing reductions.
• Connect for Health Colorado is currently running a COVID-related special enrollment period for uninsured residents, which has been extended through August 15, 2021. Note that “uninsured” includes people who have non-insurance coverage options, such as health care sharing ministry plans or direct primary care plans.
  UPDATE: Starting April 15th, Connect for Health Colorado will actually treat this SEP like an Open Enrollment period. So current enrollees may switch plans with no metal level restrictions until August 15th. Coverage begins the first day of the month following enrollment. If you’re enrolled in a non-ACA plan because an ACA-compliant plan was previously too expensive or you would just like to switch to a better plan, you may find that coverage is now much more affordable than it was in prior years. Consumers will be able to switch to any plans they prefer between April 15th and August 15th. If you’re not already enrolled through Connect for Health Colorado, you’ll be able to quote and enroll for the expanded subsidies starting April 15th for a May 1 effective date.
• Connect for Health Colorado is working closely with the Colorado Division of Insurance to sort out the details for people who already have coverage and need to update their information in order to take advantage of the new premium subsidies. Folks who are already enrolled through Connect for Health Colorado will be able to re-submit their financial eligibility to take advantage of the expanded subsidies starting May 15th for a June 1 effective date.
• If you’re already enrolled in a plan through Connect for Health Colorado and you don’t want to make a plan change or update your financial information, you’ll be able to claim the additional premium tax credits (if applicable for your situation) when you file your 2021 tax return. But if you’re enrolled in a plan outside the marketplace, you’ll need to switch to a plan through Connect for Health Colorado in order to take advantage of the new premium tax credits, either upfront in realtime, or on your tax return. Connect for Health Colorado is working on the details in terms of when people who already have coverage might be able to make changes.

Examples of savings

An example helps to illustrate the American Rescue Plan’s premium assistance. Let’s consider a 50-year-old Denver resident (zip code 80206), and see how their premiums would change at various income levels. Note that Connect for Health Colorado’s subsidy calculator does not yet have the new ARP subsidy amounts built-in (they’ve planned on their website having that functionality on April 15th), so we’ve calculated these numbers manually; here’s how the math works. Kaiser Family Foundation also has a calculator available:

Income = $18,000

• Current subsidy amount = $412/month
• Current benchmark premium = $54/month (plan includes cost-sharing reductions; has a $200 deductible and $2,000 maximum out-of-pocket)
• Current lowest-cost plan premium = $0/month (numerous plans, all with $8,550 maximum out-of-pocket limits)
• Subsidy amount under American Rescue Plan = $466/month
• Benchmark premium under American Rescue Plan = $0/month

Income = $40,000

• Current subsidy amount = $139/month
• Current benchmark premium = $327/month (plan has a $3,700 deductible and $8,150 maximum out-of-pocket)
• Current lowest-cost plan premium = $223/month (plan has an $8,550 deductible and maximum out-of-pocket)
• Subsidy amount under American Rescue Plan = $255/month
• Benchmark premium under American Rescue Plan = $211/month

Income = $55,000

• Current subsidy = $0 (income above 400% of the poverty level, so no subsidies without the ARP)
• Current benchmark premium = $466/month (plan has a $3,700 deductible and $8,150 maximum out-of-pocket)
• Current lowest-cost plan premium = $362/month (plan has an $8,550 deductible and maximum out-of-pocket)
• Subsidy amount under American Rescue Plan = $76/month
• Benchmark premium under American Rescue Plan = $390/month (8.5% of income)

These amounts are specific to a 50-year-old living in Denver. If you’re older or living in one of the areas of the state where coverage is more expensive, your additional subsidy amounts could be larger — significantly so in some cases. But if you’re younger and in an area of the state where premiums are less expensive, the additional subsidy amounts may be smaller. Most enrollees, however, will see more affordable coverage as a result of this new legislation.