The American Rescue Plan Act of 2021 was signed into law by President Biden on March 11, 2021. It includes thousands of dollars in immediate financial aid to individuals and families. The bill also addresses the impact of COVID-19 on the economy, in addition to aiding public health, state and local governments, individuals, and businesses.
Besides providing about 85% of citizens up to $1,400 in stimulus per person, the American Rescue Plan Act (ARPA) expands access to Affordable Care Act (ACA) coverage. It does so by lowering the cost of health insurance and addressing healthcare disparities. This is great news for the 1.8 million who will qualify for a $0 premium Silver plan, but there are 14.9 million uninsured Americans today. While this group will get access to more affordable healthcare policies on the federal or state Marketplace, the final premium price will dictate their buying behavior.
Here are six situations when short-term health insurance is still an alternative solution for individuals and families who don’t quite qualify for government assistance, even if they qualify for a COVID-19 stimulus check:
- About 34% of households make more than $100,000 a year and might not qualify for premium subsidies due to the individual threshold.
- While the Biden administration has changed the health insurance premium subsidy calculation from the federal poverty level threshold to a flat 8.5% rate of income to qualify for financial assistance (the next two years only),
- Short-term medical insurance becomes an option for individuals and families whose insurance premium doesn’t meet the 8.5% limit, making them unqualified for subsidy relief on their insurance premiums.
- After two years the 8.5% subsidy calculation could go back to federal poverty guidelines and increase monthly premiums. There’s no guarantee on rates.
- A two or three-year short-term policy could help someone lock in their coverage to bridge them past the unknown in 2023-2024.
Middle-Class Young Couple
A young couple lives in Texas with their two-year-old daughter. The second-lowest Silver plan has a $12,900 deductible for family coverage with 35% coinsurance. The monthly premium is $825.00 per month. Collectively, the couple brings home $153,000 annually. That means their premium is less than 7% of their income and they don’t qualify for a federal subsidy.
This same couple could buy a Pivot Health Deluxe plan with a $7,500 family deductible and 20% coinsurance for $764 per month. That is less than 6% of their total income with a lower deductible and coinsurance for three years of coverage.
- Some Americans could actually have more money in their savings accounts from unemployment payments, new tax credits and the three stimulus checks they’ve gotten in the last year. And that’s a good thing. Even if an ACA plan is still financially out of reach, they can potentially afford financial protections like short-term health insurance to get their finances in line while paying other bills.
- Parents might get a subsidy if they have an older dependent, but the kids won’t see it. College students and other dependents still living at home and helping with their living expenses will need an affordable option but won’t have access to extra dollars or ACA subsidies.
College Student Paying His Way
A college student-athlete living in Georgia who is 20 years old goes to school locally so he can live at home during the year to save on room and board. His parents require him to pay for his auto and health insurance because they cannot afford the bills. Since he’s a dependent, he doesn’t qualify for a ACA premium subsidy. But since he’s a student-athlete he’s required to carry health coverage during the school year.
For less than $90 a month this student can have short-term health coverage with a $5,000 deductible, 30% coinsurance and doctor office copays with a Pivot Health Choice plan. And an injury he sustains while playing intercollegiate sports is covered.
- Premium subsidies aren’t available to nonresident aliens or immigrant workers who don’t have citizenship status, in general.
- In general, people who don’t have a Social Security number don’t qualify for ACA insurance. They can, however, enroll in a short-term health insurance plan. The exception applies to individuals who have applied for a Social Security card. They can still apply for an ACA plan.
At the end of the day, the short-term insurance market is more than one-third of all Americans. The under 65 market is made of gig workers, open shirt self-employed, blue-shirt craftsman, employees at small companies with no insurance opportunity, and those classified as uninsured or foreign workers. There are multiple opportunities for short-term health insurance sales if you look at the large, niche markets that will benefit from a stimulus check, but not ACA benefits. The short-term health insurance marketplace remains an alternative fit for the working and middle class who have some financial means and need an immediate insurance solution.