The new American Rescue Plan Act that was just signed has some MAJOR changes that apply to health insurance. As your health insurance broker, we want to keep you aware of these changes and how they will affect you.
The subsidies are going to be recalculated starting April 1, 2021. This means that your health insurance costs could drop. You can choose to update your application after April 1, 2021 and receive the lower prices or you can take the increased subsidies as a tax credit when you file your taxes next year. This will result in a larger than normal refund.
Here is a quick summary of the new law as it pertains to health insurance:
- More enhanced subsidies
- Retroactive to the start of 2021 and in effect for until the end of 2022, enhanced federal subsidies mean people with income between 100-150% of federal poverty level will have a benchmark plan available for FREE;
- Subsidies are now available for the first time for those with higher incomes above 400% of the Federal Poverty Level—instead, capping their contribution to a maximum of 8.5% of income for a “benchmark” silver plan (For example, for a family of 2 the maximum income to qualify for a subsidy to reduce the health insurance costs was $68,960. Now the same couple who makes 100,000 will have their costs for a “benchmark” silver plan capped at 8.5% of income in this case $8500 per year. That means that the monthly cost for that benchmark silver plan in this example would be $708);
- Unemployment compensation received in 2020 will not be considered taxable income for that year; and
- Anyone who is on unemployment at any point in 2021 will be eligible for the maximum subsidies for health insurance—without regard to their income.
- Income tax: People who underestimated their income for the 2020 tax year will not have to pay their excess subsidies back. This is a one-time thing.
We understand that this is a lot of information. We are currently setting up 30-minute appointments to help you make the most appropriate choice for you. You can set up an appointment by giving us a call at 864-467-8738 (INSURE-U).
Thank you for your business, and we look forward to talking with you.