End of the Subsidy Cliff
The subsidy cliff, as it is commonly referred to, has been removed under the newly passed American Rescue Plan.
This is very exciting news to individuals and families who made too much to qualify for subsidies on the Marketplace plan.
Subsidies: This is the amount of extra help that individuals and families get each month towards their health insurance on the Marketplace. The amount of extra help are based off a few factors. Zip code, ages of everyone on the plan, number of people in your taxable household and your taxable household adjusted gross income. Depending on how far above the federal poverty line you fell based on this information, determined how much help you got towards your monthly premium on the Marketplace. Those people that made between 100% and 400% of the FPL, or federal poverty line, qualified for subsidies.
Subsidy Cliff: This became a common term because you only got help as long as you were under 400% of FPL or federal poverty line. This means that if you made over 400% above the FPL then you no longer qualified for extra help on the Marketplace. So as you earned more money, you approached the 'subsidy cliff' and you had to ensure that you didn't go over that amount. If you did earn more than 400% of FPL then you were required to pay back all the extra help you got throughout the year when you file your tax return. For some families that can be well over $10,000.
The new American Rescue Plan has now eliminated the 'subsidy cliff' and now those earning more that 400% of FPL can still get extra help towards their Marketplace health insurance plan.
Instead of a fixed amount that you must be under, they are basing extra help on a percentage of your income. The new law states that an individual or family will not pay more that 8.5% of their income towards a benchmark silver plan available to them.
As you can see from the graph below, many people are now going to qualify for lower premiums. We at Utah Avenue Insurance are very excited to help you save money on your health insurance premiums.
It will take some time for these changes to be implemented. For now, we do not know when that will take place. We do know that this new amount will backdate to January 1, 2021 if you already had a plan in place. So for the first three or four months you may get a credit or refund for those premiums you've already paid. We will post updates as we learn more about this bill and how these changes will be implemented.
If you'd like to see if and how much extra help you can get on a Marketplace plan, please reach out to us at Utah Avenue Insurance. We know your options and want to ensure that you are never overpaying for health insurance. We are training and researching daily. We want to ensure that you are getting the best plan available and all the subsidies you are entitled too.
Please feel free to call, text, drop by, email or message us through chat with any questions you may have. Our help and service to you is always free.
About Utah Avenue Insurance
Utah Avenue Insurance is your local health insurance experts. Our agents are here to help you with all your health insurance questions. Utah Avenue can help you with marketplace (aka Obamacare) plans, private health insurance and Medicare. If you have questions about how your medical insurance plans work or need help enrolling in a plan, we can help you. As always, our service is free to you.
332 S 100 W, Payson, UT 84651
699 S Main Street, Springville, UT 84663
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