How ARPA Addressed Employer-Sponsored Health Plan Coverage Losses

The American Rescue Plan Act (ARPA) supported New Yorkers who lost their employer-sponsored health plan coverage during the pandemic in three ways, according to a United Hospital Fund (UHF) issue brief.

“The American Rescue Plan Act (ARPA),1 signed by President Biden on March 11, 2021, boosted the affordability of health coverage by building on Affordable Care Act provisions,” the brief began. 

“But the sweeping pandemic relief measure also provides special coverage help to New Yorkers who lost their jobs or job-based health coverage during the COVID-19 pandemic, by building on traditional safety net programs tied to unemployment.”

First, the ARPA subsidized Consolidation Omnibus Budget and Reconciliation Act (COBRA) costs. 

COBRA coverage is considered to have more comprehensive networks than public payer programs, such as Medicare or Medicaid. However, it is expensive. For eligible New Yorkers, subsidizing COBRA brought the annual premium for private-sector employers from $8,000 for individual coverage and $23,000 for family coverage to $0.

Additionally, COBRA-eligible individuals had another chance in which to enroll in COBRA coverage if they opted out of COBRA coverage immediately after losing their employer-sponsored health plan.

COBRA premium assistance will last until at least September 30, 2021, under the current regulation.

Employers and payers shoulder 100 percent of the cost burden for COBRA coverage and receive tax credits in exchange.

Second, families who receive unemployment compensation can access premium tax credits for a low-cost silver-level health plan on the Affordable Care Act marketplace. Eligibility for these tax credits requires ineligibility for Medicaid, Medicare, Child Health Plus, the Essential Plan, or another employer-sponsored health plan that meets affordability requirements.

Certain individuals who meet specific criteria can contribute their tax credits retroactively for 2021.

Finally, the ARPA eliminated the tax credit repayment requirement for the year of 2020.

Typically, individuals who receive tax credits based on their estimated incomes can either receive the tax funds upfront and pay back what they do not use which is called an advanced premium tax credit, or wait to receive a reimbursement for any coverage that they utilized during the year when they file their taxes.

However, 2020 was an unusual year economically and posed unique challenges for those trying to calculate their incomes for the premium tax credits. 

“With incomes fluctuating because of layoffs, reduced hours, a lingering recession, the extension of unemployment benefits and federal supplemental payments, accurately estimating income for ACA tax credit purposes was challenging for many families,” the UHF issue brief explained.

For Americans who received more than they should have in advance credits in 2020, the ARPA waived the reimbursement repayments.

As a result of these flexibilities—in tandem with Affordable Care Act marketplace assistance—experts estimated that American consumers would save around $6.3 billion and that approximately 2.2 million individuals enrolled in COBRA for 2021.

Other studies have confirmed that healthcare spending was a barrier to attaining healthcare coverage during the pandemic. In a Sidecar Health poll that spanned March 27 through March 29, 2020, more than half of the 1,500 respondents stated that they had trouble finding healthcare overage after losing their jobs. 

Nearly three-quarters attributed the challenge to healthcare coverage costs. Over eight in ten respondents were concerned or somewhat concerned about the cost of healthcare coverage.

Policymakers took several steps to improve access to healthcare coverage for those who may have lost their employer-sponsored health plan due to the coronavirus pandemic.

For example, the White House tackled access to coverage in January 2021 when it established and then extended a special enrollment period for the federal health insurance marketplace.

However, the true impact of the ARPA on employer-sponsored health plan coverage has yet to be seen. The industries that were impacted the most by the coronavirus pandemic were mainly industries that did not offer employer-sponsored health plans.