(Figure 1) People with income of 200% FPL had been required to contribute $1,664 toward the cost of the benchmark marketplace plan this year now under the ARP they will have to contribute just $510. Premium tax credits will increase for people at every income level. Premium subsidies will also increase for people at higher income levels among those currently eligible for help with incomes up to 400% of the poverty level. As a result, low income people now can qualify for premium-free silver plans with modest deductibles for covered health benefits.

Cost sharing subsidies were already most generous at this income level (the average silver plan deductible for people at 150% FPL is $177 this year). Now under ARP, the benchmark marketplace plan will be fully subsidized for people earning up to 150% FPL. Those with income at 100% FPL had to contribute 2.07% of household income ($264 per year in 2021) toward a benchmark plan at 150% FPL that amount increased to 4.14% of household income( $792 per year). Previously, marketplace premium subsidies were partial no matter how poor, people had to contribute something toward the cost of the benchmark silver plan (i.e., the second lowest cost silver plan in their area). People up to 150% FPL can now get silver plans for zero premium with vastly reduced deductibles.

Under ARP, ACA marketplace premium subsidies are substantially enhanced for people at every income level and, for the first time, offered to those with income above 4 times the federal poverty level (FPL). The law also made changes to the Medicaid program designed to increase coverage, expand benefits, and adjust federal financing.

These changes will improve the affordability of coverage for individuals who are already enrolled in marketplace health plans, and will provide millions more an opportunity to newly sign up for coverage with increased financial assistance this year. The law also creates new, temporary premium subsidies for COBRA continuation coverage and it temporarily changes the rules for year-end tax reconciliation of marketplace premium subsidies. The American Rescue Plan (ARP), recently signed into law by President Biden, increases and expands eligibility for Affordable Care Act (ACA) premium subsidies for people enrolled in marketplace health plans.

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