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Biden’s American Rescue Act makes Obamacare more affordable for Michiganders

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It’s not yet clear how many thousands of Michiganders will see their monthly costs for insurance shrink under the American Rescue Plan signed into law Thursday. (Shutterstock)

Health care coverage soon will get less costly for thousands of Michiganders under the Affordable Care Act, and it’s not just the needy who will catch a break.

Tucked in the $1.9 trillion American Rescue Plan President Joe Biden signed Thursday are provisions that expand federal tax credits that increase subsidies for those already receiving coverage and expand the income pool of those who are eligible.

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Those credits bring down the cost of monthly premiums on the federal Marketplace, or www.healthcare.gov, established under the 2010 Affordable Care Act, commonly known as Obamacare. 

Bottom line: No one will pay more than 8.5 percent of their household income for certain plans, regardless of income.

“For all that it looks like we're maybe turning the corner, there are still tens of millions of people who are out of work, who are really struggling,” said Karen Pollitz, a senior fellow at the nonprofit Kaiser Family Foundation, or KFF, which tracks healthcare policy. 

“This was an effort to push more assistance in their direction, so that they could get health coverage.” 

The premium cap lasts two years and will cost $22 billion total, according to federal estimates.

Republican lawmakers and others have criticized the cost and scope of the Rescue Plan, but backers say it closes what some critics called the biggest flaw in the Affordable Care Act: income limits that priced many middle-class earners out of subsidies that dramatically cut the prices for insurance.

More than 267,000 Michiganders bought reduced-rate plans on the Marketplace, and many whose incomes varied by just a few thousand dollars could pay wildly different costs for similar premiums.

Before the Rescue Plan, 60 year-olds who made $50,000 paid $417 a month for a “benchmark” or basic health plan.

The costs would more than double to $870 per month if their income rose past $51,104, according to KFF.

That’s because the Affordable Care Act ended subsidies for those whose income was more than 400 percent above the federal poverty level ($12,880 for an individual and $26,500 for a family of four in Michigan.) 

That meant a family of four making more than $106,000 wasn’t eligible for discounts, a not insignificant number since 900,000 tax filers in Michigan in 2018 reported incomes of over $100,000, according to federal statistics.

The phenomenon was known as the “subsidy cliff” and it priced buyers out of the insurance market.

Under the Rescue Plan, the cost for a 64-year-old making $58,000 a year drops from an average of $12,900 per year to $4,950, while the cost for a 45 year-old with the same salary drops from $6,200 to $4,950, according to a February report by the Congressional Budget Office.

Estimated costs vary based on ages, income, location and other factors, and 

Pollitz said changes under the new law may take a few weeks to appear on the Marketplace.

KFF provides an interactive subsidy calculator that helps Michiganders determine their estimated cost of coverage. 

And while the exchange is normally open for a few weeks at the end of each year, the Biden administration — separate from the American Rescue Plan — has opened a Special Enrollment Period for the federal and state exchanges, allowing consumers to sign up for 2021 coverage through May 15.

The new law also drives down insurance costs for those who lost jobs during the pandemic, allowing those who lost jobs to get certain plans at no cost.

That includes those with higher incomes. Under the package, the federal government will pick up the cost of “COBRA” health coverage through September, allowing workers to temporarily continue employer-sponsored coverage even after they lose their jobs. That applies even for those who didn’t extend COBRA coverage immediately after leaving their jobs.

It’s not immediately clear how many Michiganders will be affected, said Jeff Romback, deputy director of policy & planning of the Michigan Association of Health Plans, which represents most of Michigan’s health insurers.

In 2020, 9,411 Michiganders who bought plans on the Marketplace didn’t qualify for subsidies, while another 39,003 were eligible for smaller subsidies because their income was 300 to 400 percent of the federal poverty level, Romback said.

He said the changes also may allow families to buy better insurance on the Marketplace because costs will now be lower.

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