Mar 5, 2021
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There’s a lot more to President Joe Biden’s $1.9 trillion relief package than the long-awaited $1,400 stimulus checks.
The massive bill also contains extended federal unemployment benefits, more funding for vaccines and — maybe most important for a country still mired in a pandemic — new subsidies for health insurance premiums.
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Congress is hustling to get the bill passed in the Senate this week, before punting it back to the House for final approval and delivery to Biden early next week.
So, along with a $1,400 check that you can use to pay down debt, save cash or cover household expenses, you’ll soon be able to take advantage of relief measures that could save you thousands on an Obamacare plan.
Read on to find out how.
How the bill will slash insurance premiums
Tucked into the relief bill is a provision that will not only temporarily lower the cost of health insurance but also potentially expand coverage to more than a million Americans.
So if you plan to shop around for health insurance during the current special Affordable Care Act (ACA) enrollment period, which runs till mid-May, you may soon be able to benefit from discounted rates.
Under this new provision, people not covered through an employer or government plan like Medicare of Medicaid will have their marketplace premiums capped at 8.5% of their income for the next two years.
And the plan makes those subsidies available to people who are earning more than four times the federal poverty rate, which is approximately $51,520 for single people and $106,000 for a family of four.
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What that looks like for a real person
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The group coming out best from these augmented subsidies would be adults aged 55 to 64, who account for a significant percentage of uninsured Americans but tend to use more health care services than their younger counterparts, according to analysis from the Kaiser Family Foundation.
For example, under the proposed changes, a 64-year-old woman with a $58,000 income would see her premiums reduced from $12,900 to $4,950, according to the nonpartisan Congressional Budget Office (CBO). That's a 61% savings.
The CBO says an estimated 1.3 million more people will receive coverage through this proposal.
But because these measures are temporary, ACA premiums could jump back up on Jan. 1, 2023, unless Congress moves to make these enhancements permanent.
How it will impact Medicaid in certain states
As of this month, there are still 12 states that haven’t adopted the ACA's provision to expand Medicaid eligibility, leaving about 9 million people without an affordable health insurance plan and 2 million uninsured.
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The COVID relief bill would increase pressure on those states to expand their eligibility by covering 95% of the Medicaid expansion costs — up from the 90% the federal government now offers as an incentive.
That means those states, if they choose to increase their eligibility parameters, would temporarily receive more federal funding to expand the program than it would cost them to roll it out.
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
Finding room in your budget right now
If you can’t wait for the legislation to pass to find a more affordable health insurance plan, start shopping around now for a policy that meets your budget and coverage needs.
If you're currently being crushing by their accumulated health insurance and medical costs, 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.
Finally, why stop with just your health insurance?
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 as well.
Who knows — with all these savings under your belt, your blood pressure may start going down on its own.
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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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