House stimulus bill would expand eligibility for Affordable Care Act subsidies

The latest House coronavirus relief legislation would make more people eligible for Affordable Care Act subsidies for two years, temporarily fulfilling one of President Joe Biden’s campaign promises.

The bill, introduced this week by House Ways and Means Committee chair Rep. Richard Neal, would make the federal premium subsidy more generous and would eliminate the maximum income cap.

Part of Biden’s $1.9 trillion relief package, the two moves would make buying policies on Obamacare exchanges more affordable for many middle class Americans, who have long been shut out of federal premium assistance because they earn too much.

Enrollees would pay no more than 8.5% of their income towards coverage, down from nearly 10% now. Also, those earning more than the current cap of 400% of the federal poverty level — about $51,000 for an individual and $104,800 for a family of four in 2021 — would become eligible for help.

In addition, the legislation would bolster subsidies for lower-income enrollees, eliminating their premiums completely. And it would create subsidies for unemployed workers who are ineligible to continue their job-based coverage through COBRA.

Neal’s proposal would also provide assistance for those who want to remain on their employer plans through COBRA. These laid-off workers would pay only 15% of the premium through the end of September, though that can still prove costly. The average annual premiums for employer-sponsored health insurance last year were about $7,500 for single coverage and roughly $21,500 for family plans, according to the Kaiser Family Foundation.

The premium subsidy enhancements are aimed at making coverage more affordable to more consumers, with the goal of convincing more uninsured Americans to sign up for policies.

“We know that people want health insurance. It’s the struggle to pay for it that’s the barrier,” said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. The legislation would “make a big difference for a lot of people.”

However, the proposal will not help the lowest-income people living in the 12 states that have yet to expand Medicaid. In these states, those who earn less than the poverty level — $12,760 for an individual and $26,200 for a family of four — are not eligible for federal subsidies on the exchanges.

As an incentive to expand, those states would receive a 5% boost in their federal Medicaid matching funds for two years, under a measure unveiled by the House Energy and Commerce Committee Tuesday night as part of the relief package.

If all states adopted Medicaid expansion, an additional 4 million adults would gain Medicaid eligibility, including more than 2 million who currently earn too much to qualify for Medicaid but too little to be eligible for Affordable Care Act subsidies, according to the Kaiser Family Foundation.

Also, the legislation will take time to work its way through Congress. So those who want to buy Affordable Care Act policies during the upcoming special enrollment period, which runs from mid-February to mid-May on the federal exchange, likely won’t know how much of a subsidy they qualify for when they shop for coverage — at least not initially.

Biden directed the reopening of enrollment on the federal exchange in an executive order last month — a step former President Donald Trump refused to do. Many states that run their own marketplaces followed suit.