Apr 29, 2021
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Along with delivering the third round of stimulus checks, President Joe Biden’s $1.9 trillion relief package included a major expansion of federal subsidies for health insurance plans.
On April 1, the marketplace Healthcare.gov, where people from 36 states sign up for health insurance under Obamacare, was updated to reflect the policy, giving millions of Americans the opportunity to reduce their health insurance premiums by hundreds of dollars a month — or even eliminate them entirely.
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The subsidies were originally meant to expire in January 2023, but now the president is calling to make them permanent.
The administration's American Families Plan, a $1.8 trillion proposal to help families and children, which Biden presented to Congress on April 28, would eliminate the expiration date and entrench the subsidies as the law of the land from now on.
So whether you’re planning to look for an affordable health insurance plan before the current open enrollment closes on Aug. 15, or hoping to buy into the Affordable Care Act (ACA) at a later day, the new policy promises to put quality coverage within your reach.
Here’s all you need to know about how to take advantage.
How do the new subsidies work?
While the ACA made health insurance more affordable for millions, subsidized plans still eat up a huge chunk of middle class Americans’ income.
Biden’s bill would ensure that, from now on, enrollees will pay no more than 8.5% of their income on health coverage — down from the previous 10%. Lower-income policyholders will be given subsidies that completely eliminate their premiums.
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The new rules also extend help to those earning more than 400% of the federal poverty level, which works out to about $51,000 for individuals and $104,800 for a family of four.
The changes qualify about 15 million uninsured Americans for financial assistance and offer 9 million people with subsidized plans even more help.
On average, premiums stand to decrease about $50 a month. And anyone making more than $51,000 will be able to find coverage for about $1,000 less per month than before the bill was passed.
Want to figure out how much your family can save? This handy subsidy calculator can help you find an approximation of your discounted rates.
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What do I have to do?
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If you’re already an Obamacare policyholder, the reduced premiums won’t just show up in your healthcare account.
To get your discount, you’ll have to go back to the website where you bought your health insurance plan and confirm that you want the new, expanded tax credit for your existing plan.
Unless you update your preferences, you’ll keep paying your current price until next spring, when you’ll get the difference back in the form of a refund on your 2021 taxes.
And if you haven’t bought your plan through the ACA marketplace, you’ll have to go back and cancel it and switch to an eligible plan.
What about the no-premium plans?
For lower income households, the relief bill offers no-premium plans with retroactive coverage to Jan. 1. Unfortunately, it’s going to take a few months to set up those benefits.
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Those rates are unlikely to appear on the Healthcare.gov site until this summer, meaning eligible Americans may have to split the application process into three separate steps by signing up for a plan, then getting the new income-based subsidies and finally applying for the special unemployment benefit once it’s ready.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
What to do if you need money right now
Most people will have to wait several months or a year to see the difference in their bank account. If your bills are piling up now and you need a little relief, you may want to consider folding your loans into a single, lower interest loan to give yourself some breathing room and help get out from under your debt sooner.
Since open enrollment is open for a few more months, you can also shop around to potentially find a more affordable health insurance plan right now.
And if you want to add a little more to your monthly budget, you have a few options.
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Keep the insurance savings rolling. By shopping around for the cheapest policies, you could potentially cut car insurance costs by more than $1,000 and knock down your homeowners insurance bill by hundreds.
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Get paid to surf the web. You’re already spending your free time on your phone or computer, so why not join a fun rewards program that gives you cash and gift cards for the everyday things you do online? You’ll earn cash or gift cards just for watching videos, shopping online or answering surveys.
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Slash your grocery bills by snapping pics. Download an app that gives you rewards every time you buy groceries. All you have to do is take and upload a picture of your receipt and you’ll earn points that you can redeem for gift cards from major retailers like Amazon, Target and Walmart.
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Sigrid is a senior associate editor on the Moneywise team, where she has also worked as a reporter and staff writer.
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