For those that aren’t aware there are some new consumer-friendly provisions for health insurance in the bill:
The bill would also eliminate a “subsidy cliff” that stops subsidies abruptly for people with incomes over 400% of the poverty level, and instead would continue the subsidies beyond the 400% level, limiting the percentage of income those higher earners pay toward their premium to 8.5%, resulting in a gradual decrease in the subsidy as income rises, she said in a phone call.
A “repayment holiday.” In addition, the bill addresses the miscalculations that may have occurred at the beginning of 2020, when taxpayers using the advance tax credit had to estimate their coming year’s income in order to calculate the credit they would receive. Usually, if people estimate their income too low and receive too large a credit, they have to pay back the excess the following year.
“But people’s income was all over the place in 2020,” and they could have ended up owing the government a lot of money. So a provision in the bill says that “just for 2020, there’s a repayment holiday,” said Pollitz. “People can still claim additional credits if those are due, but if their income bounced around and they earned more than projected, they don’t have to repay” the extra tax credits. And there is one other provision of interest in this area – if a person received as little as 1 week’s worth of unemployment insurance, any income above 138% of the poverty level would be disregarded when calculating eligibility for tax credits. The Senate version of the bill also includes a similar provision for calculating cost-sharing subsidies.
Building On The ACA
The Ways and Means proposal would make significant changes to bolster the ACA and improve marketplace access and affordability. The proposal would:
Extend ACA subsidies to higher-income people who do not currently qualify for 2021 and 2022;
Increase ACA subsidies for lower-income people who already qualify for 2021 and 2022;
Provide maximal ACA subsidies for individuals that receive unemployment benefits in 2021; and
Prevent taxpayers who misestimated their income in 2020 from having to repay excess premium tax credits at tax time.
The interesting last bit means that those who had to pay back excess advanced premium tax credit for 2020 now won’t have to do so. I’ve already filed am and in that category (like a lot of others), we’ll see how they address it since the bill won’t be signed until a month before tax deadline.