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Biden Proposes Making Health Premium Subsidy Boost Permanent

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What You Need to Know

  • The premium subsidy provision could help people with income over 400% of the federal poverty level who buy their own coverage.
  • The paid leave program could pay up to $4,000 in benefits per month.
  • The paid leave program financing mechanisms were not discussed.

President Joe Biden wants Congress to help him make the current Affordable Care Act (ACA) health insurance premium subsidy levels permanent.

His administration has included an ACA premium tax credit subsidy provision in a fact sheet summarizing his American Families Plan proposal.

The $1.8 trillion package includes ideas for many different family support programs, including sections that would provide free preschool for all 3-year-olds and 4-year-olds, and another provision that would provide two tuition-free years of community college for all first-time community college students.

The health insurance premium subsidy section would affect people who buy their own individual or family health insurance through HealthCare.gov or another ACA public exchange program, such as Covered California or NY State of Health.

The Original ACA Premium Tax Credit

In the past, the ACA helped people with income from 100% of the federal poverty level to 400% of the federal poverty level pay for exchange plan coverage using premium tax credit subsidies.

California, New Jersey and other states added extra subsidies for exchange plan users earning up to 600% of the federal poverty level.

The New ACA Premium Tax Credit

The new federal American Rescue Plan Act now increases the premium tax credit subsidy amount for exchange plan users with income under 400% of the federal poverty level.

The tax credit formula caps what a family has to pay out of pocket for coverage to 8.5% of income.

The new formula makes tax credits available to families that earn well over $100,000 a year.

The Biden Proposal

The Biden administration says in the fact sheet that “the American Rescue Plan provided two years of lower health insurance premiums for those who buy coverage on their own, saving families an average of $50 per person per month.”

“The American Families Plan will make those premium reductions permanent, a $200 billion investment,” according to the Biden administration. “As a result, 9 million people will save hundreds of dollars per year on their premiums, and 4 million uninsured people will gain coverage.”

A Paid Family and Medical Leave Proposal

Another section in the American Families Plan fact sheet describes a proposal for a “national comprehensive paid family and medical leave program” that would cost about $225 billion over 10 years.

The program would cover leave workers take to “bond with a new child, care for a seriously ill loved one, deal with a loved one’s military deployment, find safety from sexual assault, stalking, or domestic violence, heal from their own serious illness, or take time to deal with the death of a loved one.”

The program would provide:

  • 3 days of paid bereavement leave per year.
  • 12 weeks of “paid parental, family and personnel illness save leave by year 10 of the program.”
  • Benefits equal to a minimum of two-thirds of average weekly wages, up to a limit of $4,000 per month.

Administration officials do not say whether workers or employees would help pay for the paid leave program.

Estate Planning

The new fact sheet includes only general descriptions of provisions that might be used to raise the revenue needed to pay for the new programs.

Officials give this description of how they want to handle taxable estates:

The President would eliminate the loophole that allows the wealthiest Americans to entirely escape tax on their wealth by passing it down to heirs. Today, our tax laws allow these accumulated gains to be passed down across generations untaxed, exacerbating inequality. The President’s plan will close this loophole, ending the practice of “stepping-up” the basis for gains in excess of $1 million ($2.5 million per couple when combined with existing real estate exemptions) and making sure the gains are taxed if the property is not donated to charity.

The new capital gains provision would come with exemptions for family-owned businesses and farms, so that heirs who continue to run the businesses would not have to pay extra taxes.

Proposal Prospects

Biden administration officials have talked about trying to pass the proposal using procedures that would help supporters get the package through the Senate with just 51 votes, rather than the 60 votes needed to get ordinary bills through the Senate.

Supporters would need to round up support from both the most progressive and the most conservative Democrats.

Federal agencies would then have to implement the legislation. In the past, opponents of legislation have managed to block some provisions either by taking federal agencies to court, by persuading Congress to adopt temporary or permanent suspension measures, or by persuading Congress to change or repeal the underlying legislation.

(Image: Centers for Medicare and Medicaid Services)