On March 11, 2021, President Joe Biden signed into law H.R. 1319, the American Rescue Plan Act of 2021 (the “ARP”). In addition to the widely reported additional stimulus paychecks, the ARP includes many provisions related to the healthcare industry and marketplace that seek to improve access and affordability. The major provisions of the ARP that affect the healthcare sector are summarized below:
- ACA subsidies for health insurance purchased in the Marketplace increased and extended:
- Increased: Americans earning between 100-150% of the federal poverty level (“FPL”) will be eligible for no-premium coverage for 2021 and 2022. For those earning between 150-400% of the FPL premiums will be based on a sliding scale with a cap of 8.5% of income.
- Extended: The ARP eliminates the upper income limit on premium tax credits (“PTCs”) for two years, allowing all middle- and upper-income individuals who purchase their own coverage to access PTCs if their premiums exceed 8.5% of their overall household income. Example: A typical 60-year-old earning $60,000 who pays $960 per month in premiums for benchmark coverage, or 19% of income, now will only be required to pay $425 per month, or 8.5% of income, for 2021 and 2022.
- Unemployment Subsidies: For Americans who received (or were approved to receive) unemployment benefits during 2021, their income will be considered to be lower than 133% of the FPL allowing them to receive maximum subsidies, including no-premium coverage. This unemployment provision applies only to Americans who do not have an offer of affordable employer-based coverage; individuals who receive unemployment will still be barred from accessing ACA subsidies if someone in their household has an offer of affordable employer-based coverage.
- Repaying Subsidies: The ARP temporarily waives the requirement for taxpayers to pay back to the Internal Revenue Service (“IRS”) excess advance PTCs for the 2020 tax year. This will prevent unexpected financial burdens for consumers who underestimated their income in 2020
- COBRA Subsidies:
- The ARP will subsidize 100% of the cost of premiums for COBRA continuation coverage for workers who are laid off or have reduced hours between the period of April 1, 2021 through September 30, 2021.
- Medicaid and Children’s Health Insurance Program (“CHIP”) expansion:
- The ARP encourages those states that have not already expanded Medicaid coverage to do so by increasing by 5% the percentage the federal government pays toward the state’s Medicaid expenditures (called the “federal medical assistance percentage” or FMAP) for all eligibility groups other than those eligible through expansion. This expansion will last for two years after a state expands. States would still receive the normal 90% enhanced FMAP for the expansion group. If the remaining 14 states implemented an expansion as a result of the ARP, nearly 4 million uninsured low-income adults, including about 640,000 essential or front-line workers, could gain coverage.
- The ARP requires Medicaid programs and CHIP to provide coverage, without cost sharing, for treatment or prevention of COVID-19 for one year after the end of the public health emergency (“PHE”). The FMAP will also be increased to 100% for payments to states for administering vaccines for the same period. The requirement for states to provide treatment and prevention to uninsured individuals is extended to one year after the PHE is over if the state chooses to implement an option under Medicaid to provide COVID-19 testing for those individuals.
- The ARP gives states the option to extend health coverage for women enrolled in Medicaid or CHIP for up to 12 months after the birth of a child for the next five years (an expansion from the current 6-month coverage).
- The ARP increases the FMAP for state home and community-based services by 10% for state HCBS expenditures from April 1, 2021, through March 30, 2022.
- COVID-19 Testing and Vaccination Support Increased:
- The ARP includes over $75 billion for testing and vaccine efforts, contact tracing, and mitigation activities. This allocation also includes funding for advanced vaccine research and development, and increased manufacturing, production, and purchase.
- Focus on Mental Health Services:
- The ARP provides over $3 billion to state block grants for community mental health services and substance abuse prevention, as well as $420 million to community behavioral health clinics with an additional $200 million for various mental and behavioral health-related programs. The ARP also increases FMAP payments to state Medicaid programs offering community-based mobile crisis intervention services by an amount equal to 85% of these services’ costs for a three-year period beginning one year after enactment.
- Supporting existing public healthcare programs:
- $8.5 billion to the Provider Relief Fund for rural providers;
- $14.5 billion for care provided by the Department of Veterans Affairs;
- $7.6 billion for community health centers;
- $500 million to eligible entities, including public municipalities and counties, nonprofit organizations and tribes in rural areas in the form of rural development grants for rural healthcare; and
- $5.4 billion to the Indian Health Service.
In addition to the healthcare specific supports offered by the ARP, it also provides additional funds to states, localities, and tribal governments and extends to December 31, 2024, the period during which those funds can be used for public health efforts and to address the pandemic’s impact. The ARP also includes supports for workforce initiatives, Marketplace modernization, agriculture and nutrition programs, schools and colleges, and small business assistance.
It is very possible that the Biden Administration will seek to make some of the temporary changes under the ARP permanent. Check back on the BMD Resources page for updates on this and other timely legal topics. For any questions of the ARP’s coverage please contact Healthcare & Hospital Law Attorney Ashley Watson at firstname.lastname@example.org.