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American Rescue Plan brings change, tax credit to health insurance

When the American Rescue Plan Act of 2021 was passed and signed into law earlier this month by President Joe Biden, it was heralded as the next big effort to help Americans weather the COVID-19 pandemic storm.

The $1.9 trillion economic stimulus bill, which was passed largely along party lines, put $1,400 in the pockets of Americans as well as extending unemployment benefits and emergency paid leave, among other key elements of the bill — all of it done to help speed the nation’s recovery.

However, another part of the bill comes as a direct benefit for those with healthcare insurance through the Affordable Care Act and hubs like MNsure.

Before COVID, MNsure applied to people at 400 percent of the poverty level, qualifying those families for tax subsidies.

However, with the passing of the American Rescue Plan Act, those who can now qualify for tax subsidies have been expanded.

“People who have higher incomes will have access to subsidies,” said Chuck Moline of Advisornet Financial in Austin, which is one of 21 broker enrollment centers in the state qualified to sign people up through MNsure. “The tax subsidy is based on the premise that healthcare should cost you no more than 8.5 percent of whatever your family income is.”

Moline used the example of a family of two ages 61 and 55.

“They have a household income of $104,000,” he said. “In the past they would not have received any financial assistance at all.”

That household would have been looking at a premium of $2,000 a month, but through the new income calculators by MNsure, that same family would be looking at $1,159 in a tax credit, leaving the family to pay the net premium of $841 a month.

“That’s substantial dollars for people who weren’t eligible prior to this that will now be eligible for tax credit,” Moline said.

This program will be extended through Dec. 31, 2022.

However, to take advantage of this, people need to be signed up for health insurance through MNsure. Those with insurance through employers or other sources do not qualify for the tax credits.

At the same time, one can’t simply drop existing healthcare through MNsure. If an insurance through an employer, for example, is cheaper than MNsure, then that person wouldn’t be eligible for a MNsure plan. They would have to appeal through MNsure with a hope of picking up health insurance through the hub.

The American Rescue Act Plan has opened up a special window to sign up at the federal level that started on Feb. 1 and will go through Aug. 15. Minnesota’s window is Feb. 1 through May 15, but Moline thinks there is a chance the state will follow the Federal window and expand it to that Aug. 15 date.

“I’m not sure, but I’m pretty confident MNsure will follow step with that,” he said.

According to MNsure, those who have enrolled could see changes fairly soon.

Current MNsure enrollees who are receiving an advanced premium tax credit will see an automatic tax credit increase starting in May. The increased APTC benefit determination will be automatically sent to the enrollee’s insurance company, and the insurance company will adjust their monthly premium invoice.

 When MNsure enrollees file their federal taxes for 2021 they will receive any additional premium tax credit for the months prior to when their automatic increased APTC began in 2021.

Advisornet was one of the first in the state to be an ACA hub when it was one of only six to do so. He sees this part of the American Rescue Plan Act as being a substantial benefit for those looking for affordable health insurance.

“This is a tremendous thing because it finally gets health insurance to somewhat of an affordable level for people,” he said. “We’ve got people forgoing health insurance just because it’s too expensive. This is the one time in the country’s history where you don’t want to be going without health insurance.”