July 2021 A Shot in the Arm: American Rescue Plan Act Boosts Health Coverage Affordability Watch Peter Newell, Director, Health Insurance Project United Hospital Fund While New Yorkers lined up for their COVID-19 vaccinations, Congress and President Biden provided a major shot in the arm for the 11-year-old Affordable Care Act as part of a broad stimulus package known as the Health American Rescue Plan Act.1 After years of neglect and outright hostility toward ACA programs by Congress and the Trump administration, the ARPA deepens affordability subsidies, provides premium tax credits to higher-income individuals and families, and creates new options for New Yorkers who lost job-based health coverage or collected unemployment insurance benefits in 2021. This issue brief focuses on the larger subsidies (tax credits) available for the purchase of coverage through New York’s health insurance marketplace (NY State of Health, or NYSOH), and the expansion of subsidy eligibility to households that earned too much for financial help under the original ACA standard. This is the first in a two-part series on health coverage provisions in the American Rescue Plan Act. The next brief will highlight extra coverage help for people who have lost their jobs or job-based health insurance. How the ACA Makes Coverage quickly to implement the act’s new provisions, More Affordable extending the open enrollment period through the end of December 20216 and addressing Under the ACA, premiums for eligible the subsidy enhancements in a multi-phase individuals and families purchasing qualified process.7 In the first phase, the eligibility of health plans through the marketplace are two groups—current NYSOH enrollees with capped at a percentage of income on a sliding incomes at or below 400% of FPL who meet scale; federal premium tax credits make the standards for the enhanced tax credits up the difference between the actual cost and those who opened an online account but 2 of the coverage and the enrollee’s share. didn’t sign up for coverage—was recalculated. Consumers have the option of applying all These individuals were advised of the ARPA or a portion of their tax credit up front to changes through emails and letters, and they lower monthly costs, or they can collect a were invited to log into their accounts and refund later through their tax filings. The tax apply the higher subsidies to lower their credit amounts are tied to the second-lowest- monthly premiums starting May 1, 2021. The cost “silver” plan in a county, known as the marketplace also updated its “compare plans 3 benchmark plan, and the premium caps and estimate cost” anonymous shopping tool, range from 2.07% at 100% of the federal issued a revised consumer guide,8 provided poverty level (i.e., $12,760 for an individual assistors that help consumers enroll with and $26,200 for a family of four) up to new toolkits9 and lists of clients eligible for 9.83% at 400% of the FPL (about $51,040 enhanced subsidies, and launched digital10 for an individual and $104,800 for a family advertisements, videos, and social media. of four).4 For the current year, an individual in Brooklyn earning about $30,000 (235% Next, NYSOH automatically adjusted the FPL) would pay around $200 monthly for subsidy levels for all current enrollees earning coverage under the lowest-cost silver plan less than 400% FPL (less than $51,000 for (8% of income), with the federal government individuals and $104,000 for a family of sending another $429 per month in advanced four). Finally, the marketplace made tax premium tax credits directly to the health credits available for consumers earning over 5 plan. 400% FPL in June, updating the “compare plans and estimate cost” tool to reflect the The ARPA improves ACA affordability in two higher subsidies. Currently, consumers are ways: substituting a lower sliding-scale cap permitted to enroll in the marketplace and for premiums than the original ACA income pay the full premium at that income level (and guide; and permitting individuals and families some do), but now ARPA subsidy eligibility earning more than 400% FPL to qualify for will drive down premiums for many. subsidies if premiums for the benchmark plan in their county exceed 8.5% of income, the In order to illustrate the affordability new cap at the top of the sliding scale. These enhancements from the ARPA, “before changes apply to the 2021 and 2022 policy and after” scenarios were developed using years, and are due to expire at the end of hypothetical individual and family units from 2022. different counties and with varying incomes, showing how the ARPA would affect the cost Implementing the ARPA of their coverage. Premium reductions for existing and potential enrollees eligible for tax After President Biden signed the ARPA into credits under the original ACA standards are law in March 2021, New York State moved highlighted first. UNITED HOSPITAL FUND | HEALTHWATCH: ARPA BOOSTS HEALTH COVERAGE AFFORDABILITY 2 Increased Affordability the ACA formula for tax credits drives slightly of ACA Plans higher subsidies to consumers living in areas where there is a larger difference between the Just as the ACA played out differently lowest- and second-lowest cost silver plan, depending on states’ underlying insurance New York City residents pay slightly lower laws and regulations, the ARPA does too. premiums. For example, a QHP individual First, New York’s Child Health Plus program purchaser in Queens earning about $25,600 is the most generous in the nation, charging annually would see monthly premiums fall zero cost sharing, and subsidizing premiums from about $130 per month under the ACA for families earning less than 400% of the calculation to $31 per month for the lowest- 11 FPL. As a result, many families package CHP cost silver plan with the new ARPA rules, a coverage with qualified health plans purchased roughly 75% reduction, while an individual on the NYSOH marketplace for adults. And with income of about $32,000 would save because New York (along with Minnesota) over $116 in monthly premium costs under opted to take advantage of an ACA option to the ARPA compared to the ACA. Even at create a Basic Health Program (known in New the upper end of current scale (400% FPL or 12 York as the Essential Plan), enrollees earning $51,040), Queens buyers would pay 14% less less than 150% FPL in New York already in premiums compared to the ACA subsidies. enjoyed $0 premiums, and about 400,000 For a Queens family of four purchasing the enrollees with incomes between 150% and lowest-cost silver plan, premium reductions 200% FPL ($19,140 and $25,529) paid $20 follow the same pattern of percentage per month. But as part of the recently enacted decreases, dropping by nearly 80% for a state budget for fiscal year 2022,13 New York family earning about $52,600 annually eliminated the $20 premium for the higher- (201% FPL) and over 40% for a family with income Essential Plan group, and also added an income of $78,600 (300% FPL). Families no-cost vision and dental benefits beginning at the top end of the ACA premium cap scale June 1, 2021. Increased ARPA premium (400% FPL or $104,800) would save over subsidies for lower-income people will flow to $100 a month. the trust fund set up to operate the Essential Plan, which will help offset the cost of the new Individuals and families in Tompkins County premium reductions and benefits. The ARPA and Erie County would also benefit from subsidy increases will have a more visible— sharp premium reductions. Premiums for and dramatic—impact on premiums for individual lowest-cost silver plans would individuals and families with incomes between drop by about 70% for individuals earning 200% and 400% of the FPL. just over $25,520 (200% FPL), and by over 40% for those earning about $38,000 (300% As shown in Table 1, the new ARPA premium FPL). Family savings would mirror the savings scale produces consistent savings across for individuals in both Tompkins and Erie Queens County, Tompkins County (Ithaca), counties, with monthly premium reductions and Erie County (Buffalo), with the biggest ranging from nearly $200 at the low end of premium reductions occurring for individuals the income scale (200% FPL, or $52,500 earning between approximately 200% of the annually) to $117 at the high end (400% FPL, FPL and 300% ($25,600 to $38,200). Because or $104,800 annually). UNITED HOSPITAL FUND | HEALTHWATCH: ARPA BOOSTS HEALTH COVERAGE AFFORDABILITY 3 Table 1. ACA vs. ARPA Premiums, for Incomes 200% to 400% FPL, 2021 TABLE 1. ACA VS. ARPA PREMIUMS, FOR INCOMES AT 200% TO 400% OF THE 1A. Queens CountyFEDERAL, Silver POVERTY Single Plan LEVEL, SINGLE AND FAMILY PLANS, 2021 ACA Premiums ARPA Premiums ARPA Over ACA Comparison Monthly Annual Percent FPL Income Monthly Annual Monthly Annual Savings Savings Diff. 201% $25,600 $128 $1,542 $31 $372 $97 $1,170 -76% 250% $31,900 $210 $2,525 $94 $1,128 $116 $1,397 -55% 300% $38,280 $302 $3,618 $179 $2,148 $123 $1,470 -41% 400% $51,040 $406 $4,867 $349 $4,188 $57 $679 -14% 1B. Tompkins County, Silver Single Plan 201% $25,600 $140 $1,682 $44 $528 $96 $1,154 -69% 250% $31,900 $222 $2,665 $107 $1,284 $115 $1,381 -52% 300% $38,280 $313 $3,756 $192 $2,304 $121 $1,452 -39% 400% $51,040 $418 $5,020 $362 $4,344 $56 $676 -13% 1C. Erie County, Silver Single Plan 201% $25,600 $140 $1,682 $44 $528 $96 $1,155 -69% 250% $31,900 $222 $2,665 $107 $1,284 $115 $1,381 -52% 300% $38,280 $314 $3,771 $192 $2,305 $122 $1,466 -39% 400% $51,040 $419 $5,026 $362 $4,346 $57 $680 -14% 1D.