Buying your own health insurance can get expensive if you work independently. Even so, a new federal law signed in March 2021 is providing mass healthcare insurance subsidies for nearly all Americans. This plan is worth $1.9 trillion, making it one of the most expensive government programs of all time. Here's a look at how this new law helps the average American.
ARPA Lowers Healthcare Costs
The American Rescue Plan Act (ARPA) signed by President Biden makes health insurance more affordable for millions of Americans. You can learn more about tapping into this program by visiting HealthCare.gov, the federal government's official healthcare insurance marketplace. This new plan aims to attract uninsured individuals as well as existing healthcare policyholders looking to make a change in carriers.
Putting a Lid on Rising Healthcare Costs
ARPA will be in effect through 2022 to prevent individuals from committing over 8.5% of their income to healthcare premiums. A new option is a zero premium plan for low-income earners of about $19,000 or less per year. It also applies to families, which at the poverty level earn $39,000 or less for a family of four.
While the average silver plan deductible in 2021 is around $5,000, ARPA will help lower deductibles to less than $200, according to Karen Pollitz, a senior fellow of Kaiser Family Foundation. These subsidies are available for 92% of individuals who purchase their own insurance plans. The remaining 8% who aren't offered a subsidy are high-income earners who are able to pay high or low premiums.
How ARPA Affects Employers
ARPA allows employers to offer a tax credit to staff members who qualify for emergency FMLA leave. These workers can also claim a federal tax credit and get sick leave pay for up to two-thirds of their regular earnings, The maximum tax credit limit per individual increases in 2021 from $10,000 to $12,000 per employee. For employers to be eligible to offer this tax credit, they must not favor employees who are already well paid.
Another component to ARPA is that the dependable care flexible spending account (FSA) limit has been increased for 2021. The rise from $5,000 to $10,500 is a discretionary choice for employers to make.
Certain employers are required to offer free COBRA coverage under ARPA. COBRA is a federal law designed to protect employees enrolled in group insurance plans even when the plans expire. The new law calls for free COBRA coverage for individuals not yet enrolled in it.
Other Interesting ARPA Facts
A new agency will grow from ARPA, much like the defense industry's DARPA, which developed the internet and research that led to mRNA technology for COVID-19 vaccines. The new health research agency will study diseases such as cancer, Alzheimer's, and diabetes.
The agency plans to learn from the lessons of COVID-19 and use knowledge from rare disorders to treat common health problems. Nonetheless, the agency will also consider how every individual needs their own specialized treatment for whatever condition they have. In that sense, the one-size-fits-all era of healthcare treatment for these diseases will be giving way to more personalized healthcare based on individual needs.
ARPA also provides various tax credits for employees on paid leave who get a COVID-19 vaccination. It also pays tax credits to workers who became ill from the vaccine. Tax credits can also be claimed by individuals who care for another person stricken with COVID-19.
Despite all the subsidies provided by ARPA, millions of Americans still lack health insurance because some don't earn enough income to afford a monthly premium. Yet, getting the right healthcare coverage helps you sleep better at night, knowing a single hospital visit won't drain your life savings.
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