How to take advantage of the federal stimulus bill’s health insurance benefits

The federal coronavirus stimulus package includes financial relief for people who buy individual health plans or lose their job and qualify for COBRA coverage.

Health insurance is a major expense for many families and has become an even bigger strain during the pandemic among people who lost their jobs or saw a decline in their income. At the same time, a worldwide health emergency is no time to go without insurance.

Here’s what to know about how to take advantage of the stimulus package’s health insurance benefits:

For people who buy individual health plans through the Affordable Care Act marketplaces — Pennie in Pennsylvania or Get Covered NJ in New Jersey — the stimulus plan increases the amount of tax credits available to offset the cost of insurance premiums, the amount you pay per month for the plan. It also expands who is eligible for credits for 2021 and 2022.

Previously, only people who earned less than 400% of federal poverty, about $50,000 annually, were eligible for a tax credit. Tax credits varied by income level and ensured low-wage households did not spend more than 9.8% of their income on health insurance. Tax credits still vary by income, but now anyone can qualify for one. The amount of the tax credits has gone up, so that no one pays more than 8.5% of their income on a marketplace plan.

» READ MORE: Pandemic unemployment spurs health insurance marketplace enrollment as exchanges prepare to reopen

Rules may vary by state, but in Pennsylvania, current customers do not have to do anything.

Pennie plans to re-run everyone’s eligibility and the tax credit will be effective for the start of their coverage, a spokesperson for the marketplace said. Pennie will notify customers about the potential changes to their financial assistance and any steps they need to take in their account.

People should check with Pennie in the coming weeks for more details or changes to the marketplace’s plan for updating tax credits.

New Jersey is working to make the changes and will provide guidance to consumers once they are finalized.

Because tax credits are based on estimated annual income, it is common for people to owe or get back money at the end of the year, if they earned more or less than they anticipated. But because the pandemic made income estimates unpredictable, the stimulus package will not require people to pay back tax credits in 2020.

Moving forward, the old rules will apply, so it is important to update your income with the marketplace if you experience a job change or shift in your projected income.

People who get health insurance through an employer are often eligible for COBRA coverage when they are laid off. COBRA coverage allows them to stay enrolled in their health plan by paying the full premium — the part they had been paying while working, plus the portion previously paid by their employer. Under the stimulus package, the federal government will subsidize the cost of COBRA coverage for any eligible laid-off workers, meaning they can stay on their health plan for free until Sept. 30.

» READ MORE: Stimulus bill boosts health coverage by expanding Obamacare tax credits and subsidizing COBRA

Any current COBRA enrollees who are eligible for the program because they were laid off or had their hours cut (as opposed to quitting or voluntarily reducing their hours) can get the subsidies. People who are laid off after April 1 and those who were previously laid off but had not yet enrolled in COBRA coverage are also eligible, said Katie Keith, principal at Keith Policy Solutions, which advises nonprofits and foundations on health care issues.

Subsidies will be processed through employers and health insurers. The Department of Labor will be creating notices that businesses can send to eligible former employees. Contact your former employer with questions and to ensure you get the subsidy as soon as possible.

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