New ACA Subsidy In Relief Package?

[Freedom56]

This is what is in H.R. 1319.

PART 7—PREMIUM TAX CREDIT

SEC. 9661. IMPROVING AFFORDABILITY BY EXPANDING PREMIUM ASSISTANCE FOR CONSUMERS.
(a) In General.—Section 36B(b)(3)(A) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause:

“(iii) TEMPORARY PERCENTAGES FOR 2021 AND 2022.—In the case of a taxable year beginning in 2021 or 2022—

“(I) clause (ii) shall not apply for purposes of adjusting premium percentages under this subparagraph, and

“(II) the following table shall be applied in lieu of the table contained in clause (i):

This is the text from H.R.1319 that was passed.

“In the case of household income (expressed as a percent of poverty line) within the following income tier: The initial premiumpercentage is— The final premium percentage is—
Up to 150.0 percent 0.0 0.0
150.0 percent up to 200.0 percent 0.0 2.0
200.0 percent up to 250.0 percent 2.0 4.0
250.0 percent up to 300.0 percent 4.0 6.0
300.0 percent up to 400.0 percent 6.0 8.5
400.0 percent and higher 8.5 8.5”.

(b) Conforming Amendment.—Section 36B(c)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(E) TEMPORARY RULE FOR 2021 AND 2022.—In the case of a taxable year beginning in 2021 or 2022, subparagraph (A) shall be applied without regard to ‘but does not exceed 400 percent’.”.

(c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2020.

The referenced IRS code where this amendment applies to is here:

https://uscode.house.gov/view.xhtml?req=(title:26 section:36B edition:prelim)

Many people who purchased health insurance directly from the insurance company because they had no subsidies will now have to switch over if they now to qualify for the subsidies. This will certainly cause a mass scramble.

 

[GLM]

Opps

True, I forgot about the 80% premium kick back. However with more customers they should make more money.

 

[pb4uski]

I’m for the subsidy changes as managing to the cliff takes too many hours away from my retirement. . But it is definitely a handout to the insurance cos. They will just raise their rates to accommodate the new gov reimbursements and we’ll all be right back into deficit subsidy again. I would have preferred more legislation around transparency in pricing so we all would have a better chance to compare apples and oranges. And a comparison of what similar charges run in other countries. Hopefully some day.

Yup, as others have pointed out, you're off base. Many people villianize the insurance companies without knowing that their margins from health insurance are limited to 25% by law, and that 25% needs to cover overhead, taxes and profits for shareholders who provide capital to write the business.

 

[meridiver]

I’m for the subsidy changes as managing to the cliff takes too many hours away from my retirement. ��. But it is definitely a handout to the insurance cos. They will just raise their rates to accommodate the new gov reimbursements and we’ll all be right back into deficit subsidy again. I would have preferred more legislation around transparency in pricing so we all would have a better chance to compare apples and oranges. And a comparison of what similar charges run in other countries. Hopefully some day.

For those of us with incomes between $64K and $100K who can't control the timing of our income because it's based on rents or some other regular monthly collection, this provision is HUGE. It's not just a handout to the insurance companies.

If we didn't live in CA, we'd be paying 19% of our income for health insurance premiums this year. Thanks to CA state subsidies that grant some relief to that income bracket, we're "only" paying 13%. And this is for a bronze plan in which we are still on the hook for approx. $12K out of pocket on top our premiums if we get sick.

 

[GLM]

How the COVID relief law will rescue marketplace plan buyers

The 'rescue' in the American Rescue Plan Act includes saving policyholders from repayment of thousands in excess premium subsidies for the 2020 tax year


https://www.healthinsurance.org/blo...lief-law-will-rescue-marketplace-plan-buyers/

 

[PaunchyPirate]

I've managed to thoroughly confuse myself on whether the passed legislation impacts me or not.

My situation:

I am single
Estimated 2021 MAGI = $43,000
Current Full Premium = $899.78 (Gold Plan)
Current ACA subsidy = $575/month
My current monthly premium = $324.78
It looks like the SLCSP in my county is $927.57/month

Will my current subsidy be increased by the legislation?
If so, has it been identified how getting any additional subsidy gets accomplished? Can it only be accomplished at tax time next year, or are insurers required to adjust the monthly billing?

 

[RunningBum]

I've managed to thoroughly confuse myself on whether the passed legislation impacts me or not.

My situation:

I am single
Estimated 2021 MAGI = $43,000
Current Full Premium = $899.78 (Gold Plan)
Current ACA subsidy = $575/month
My current monthly premium = $324.78
It looks like the SLCSP in my county is $352.57/month

Will my current subsidy be increased by the legislation?
If so, has it been identified how getting any additional subsidy gets accomplished? Can it only be accomplished at tax time next year, or are insurers required to adjust the monthly billing?

Ignoring the new subsidy for the moment. If these numbers are correct, the SLCSP is more than the gold plan you are on? Seems odd.

 

[zinger1457]

Will my current subsidy be increased by the legislation?

Your subsidy should go up. KFF has updated their subsidy calculator with the changes in the new relief package so you should be able to find out exactly how the changes impact your subsidy. My subsidy went up ~$90/mo. The big benefit for me is not having to worry about the cliff, my estimated income for 2021 was ~$700 under the cliff.
https://www.kff.org/interactive/subsidy-calculator/

 

[PaunchyPirate]

Ignoring the new subsidy for the moment. If these numbers are correct, the SLCSP is more than the gold plan you are on? Seems odd.

I have corrected my original post. I had included the subsidy in the SLCSP in the original.

HOWEVER, even with that added back in to compare apples to apples, the silver plan actually is more expensive than the gold plan.

Silver is $927.57 and Gold is $899.78.

Pennsylvania is one of the states that instructed the insurance companies to stack the deck a little by piling their added costs on to the silver plans more than the other plans. There is a reason for doing this and, for the life of me, I can't recall how best to summarize it and I can't find a link to the details. I'm sure someone on here will be able to give us the details.

 

[PaunchyPirate]

Your subsidy should go up. KFF has updated their subsidy calculator with the changes in the new relief package so you should be able to find out exactly how the changes impact your subsidy. My subsidy went up ~$90/mo. The big benefit for me is not having to worry about the cliff, my estimated income for 2021 was ~$700 under the cliff.
https://www.kff.org/interactive/subsidy-calculator/

Thanks for the link to the calculator. Just what I needed.

It shows my subsidy would go up $105/month.

 

[catotx]

I have corrected my original post. I had included the subsidy in the SLCSP in the original.

HOWEVER, even with that added back in to compare apples to apples, the silver plan actually is more expensive than the gold plan.

Silver is $927.57 and Gold is $899.78.

Pennsylvania is one of the states that instructed the insurance companies to stack the deck a little by piling their added costs on to the silver plans more than the other plans. There is a reason for doing this and, for the life of me, I can't recall how best to summarize it and I can't find a link to the details. I'm sure someone on here will be able to give us the details.

Your income of $43,000 puts you at 3.37x the poverty line. Using the updated KFF calculator, you would not need to pay more than 6.93% of $43,000 = $2979.90 for the SLCSP.

The SLCSP costs $927.57 x 12 = $11,130.84. So your new subsidy would be $11,130.84 - $2979.9 = $8150.94 a year or $679.25 a month.

 

[scrabbler1]

Your subsidy should go up. KFF has updated their subsidy calculator with the changes in the new relief package so you should be able to find out exactly how the changes impact your subsidy. My subsidy went up ~$90/mo. The big benefit for me is not having to worry about the cliff, my estimated income for 2021 was ~$700 under the cliff.
https://www.kff.org/interactive/subsidy-calculator/

Thanks for the link. The calculator is good at determining the subsidy although it doesn't actually know what I am paying. The subsidy, at least for me, is based on my MAGI (income) and the SLCSP, not by what the policy's unsubsidized premium is.

I had initially estimated that my subsidy would rise another $150 per month. The calculator, which seems to more accurately use the new sliding scale for income, estimated my subsidy increasing another $180 per month instead. I am eager to find out if my state's (NY) exchange will do this for me so I won't have to wait until next year to see it in my tax return.

 

[RetiredAt55.5]

I have corrected my original post. I had included the subsidy in the SLCSP in the original.

HOWEVER, even with that added back in to compare apples to apples, the silver plan actually is more expensive than the gold plan.

Silver is $927.57 and Gold is $899.78.

Pennsylvania is one of the states that instructed the insurance companies to stack the deck a little by piling their added costs on to the silver plans more than the other plans. There is a reason for doing this and, for the life of me, I can't recall how best to summarize it and I can't find a link to the details. I'm sure someone on here will be able to give us the details.

IIRC, I think you need to pick a silver plan if you are eligible for and want to take advantage of the additional CSR's (cost sharing reductions).

 

[erkevin]

As a retired couple paying $1348/mo. for a bronze ACA plan, any help would be wonderful.

I may be the "winner winner chicken dinner" in all of this. Using the updated calculator, my wife and I will/may be eligible for a $904 monthly subsidy. Wholly Moly!

 

[simple girl]

I may be the "winner winner chicken dinner" in all of this. Using the updated calculator, my wife and I will/may be eligible for a $904 monthly subsidy. Wholly Moly!

Wow, that's awesome! Happy for you!

We will get about $110 more added to our current subsidy, which should take us back to paying approximately what we paid last year for coverage. Very happy about that!

 

[PaunchyPirate]

IIRC, I think you need to pick a silver plan if you are eligible for and want to take advantage of the additional CSR's (cost sharing reductions).

This is correct. I don’t try to achieve those, myself.

 

[PaunchyPirate]

Pennsylvania has its own ACA exchange. This evening they posted on their Facebook page that, with respect to the subsidy rate changes, they would “move quickly in implementing these changes in the interest of delivering this financial relief as expeditiously as possible.”

Sounds like they will be triggering the higher subsidies themselves for the rest of the year. Hopefully.

 

[Z3Dreamer]

Kaiser Family Foundation has a calculator based on the recently passed legislation. Have not tried it yet.
https://www.kff.org/interactive/subsidy-calculator/

 

[bobandsherry]

Anyone know why this is only for 2 years?

Just my guess, but new Administration wants to continue to further implement ACA, uses the "covid relief" as a way to shim in a change. Calls it out as 2 years so it smells like a covid relief item, gets less pushback. Once this is in, it's relatively easier to fight to continue it as you can show all the good it's done, or perhaps tweak it if it's not working as expected. Then either continue to roll it every few years or make it permanent. Or could be the Adminstration doesn't really believe that the vaccine will provide the type of immunity that they've been claiming and getting ready for the 2nd wave of the sh!t hitting the fan over the next few years. I feel stronger it's the first than the later.... but the 2nd could be the type of justification that got it into the bill to start with. Or heck, I can be totally wrong. Won't be the first, won't be the last. I'm OK with that.

 

[bobandsherry]

1+

Almost makes me glad I'll turn 65 on 3/10/2023 when the cliff may return.

I'll be turning 60, been managing my cliff now for 5 years. A couple years to recognize some LTC gains and converting to Roth without the concern of the cliff penalty and I won't need to worry about the cliff for the years until I turn 65.

 

[Sangiovese]

Just my guess, but new Administration wants to continue to further implement ACA, uses the "covid relief" as a way to shim in a change. Calls it out as 2 years so it smells like a covid relief item, gets less pushback. Once this is in, it's relatively easier to fight to continue it

Yes, this is how it's done. Put in a benefit that is popular politically but controversial fiscally. Make it "temporary" so it passes. When the provision is ready to sunset (around the 2022 election), make it a campaign issue. Tell voters to re-elect the majority so they can protect your benefits. Claim that the other party will "take your benefits away". When re-elected, extend it for another two years until 2024. Lather, rinse, repeat.

 

[RunningBum]

From what I understand, the reconciliation rules don't allow for permanent changes. Reconciliation is supposed to allow annual budgets to be passed without the threat of filibuster.

Bumping this post, which explains why the changes were only done for two years. This looks like a better explanation to me rather than some political/re-election strategy.

 

[GTFan]

C'mon guys, stay out of the politics b4 this gets closed. It's a useful thread to the ERs here.

 

[Sangiovese]

Bumping this post, which explains why the changes were only done for two years. This looks like a better explanation to me rather than some political/re-election strategy.

It is true that Reconciliation rules do not allow for permanent changes. It is also true that whichever party uses Reconciliation to enact popular benefits (either D or R) will use the possibility of losing those benefits as a campaign tactic. This is truly not meant as a partisan commentary. Just a statement of reality. Both parties do it.

Having said that, I will personally benefit from the elimination of the cliff. I hate cliffs and I hope that this benefit is extended beyond 2022.

 

[bobandsherry]

Bumping this post, which explains why the changes were only done for two years. This looks like a better explanation to me rather than some political/re-election strategy.

Everyone entitled to their own belief and I'm willing to listen. But I don't see how elimination of the "cliff" has anything to do with "covid relief". I'm a winner winner chicken dinner from this so I'm OK going to the payout window and claim my winnings.