Health Insurance Subsidies in the American Rescue Plan Act

By Mitchell J. Smilowitz, CPA

For those purchasing health insurance through a state health insurance exchange or the federal health insurance marketplace, the American Rescue Plan Act (ARPA) offers important benefits that can reduce the premiums you pay. In 2021 and 2022, for the first time, benefits are available to those with adjusted gross incomes (AGI) up to 400% of the federal poverty line ($51,520 for a single person and $106,000 for a family of four).

In particular, clergy purchasing health insurance through an Exchange,whose AGI is reduced through parsonage benefits, may now be eligible for federal support. 

The Act ensures that, in 2021 and 2022, nobody purchasing health insurance on an Exchange spends more than 8.5% of their AGI on premiums for “silver” plan coverage.

Please note that many Exchanges are operated by individual states and the rules governing health insurance subsidies and tax credits can be complex. The information we present below offers a general, national perspective. Please contact the Exchange in your state to determine the premium subsidies and tax credits for which you are eligible.

Increasing Subsidies for Using Health Insurance Exchanges

Those with AGI up to 150% of the federal poverty line ($19,320 for a single person and $39,750 for a family of four) are now eligible for no-premium “silver” plan coverage. This benefit may be available retroactive to January 1, 2021.

Expanding Eligibility If You Receive Unemployment Benefits

If you received unemployment compensation during 2021, you may now be eligible for the maximum subsidy. However, if someone in your household was eligible for employer-based coverage while you were uninsured, this may not apply.

COBRA Subsidies

ARPA will subsidize 100% of the cost of COBRA continuation coverage for workers who are involuntarily laid off or have reduced hours. The subsidy began on April 1, 2021 and extends through September 30, 2021. This subsidy will not count towards your gross income. Other limitations may apply.

The American Rescue Plan Act greatly increases subsidies to many of those who purchase their health insurance coverage through the health care exchange in their state. This article briefly summarizes the benefits for which those using the Exchanges may be eligible. Please contact your state Exchange to see if you are eligible for these additional subsidies.

May 2021