President Biden Signs Legislation Extending Enhanced ACA Subsidies
On Aug. 16, President Joe Biden signed into law a $700 billion reconciliation package after more than a year of on-again-off-again negotiations. The legislation, which was initially referred to as "Build Back Better," was drastically scaled back from its more than $3 trillion initial price tag and renamed the Inflation Reduction Act.
In addition to containing funding for a number of energy and tax policy changes, the legislation includes several important health care provisions, including:
- A three-year extension of enhanced health insurance subsidies for plans purchased on the exchange, through 2025.
- A provision that allows Medicare to begin negotiating certain prescription drug prices, beginning with the 10 highest-costing drugs in 2023 and expanding to 20 each year by 2029.
- A cap on Medicare beneficiaries' out-of-pocket costs at $2,000 per year.
- A provision that penalizes drug companies for raising costs on drugs in excess of inflation.
- Free coverage of vaccines such as COVID and shingles under Medicare.
- Subsidies to control growth in Medicare Part D premiums for seniors' prescription drug coverage.
The enhanced health insurance subsidies were
initially passed under the American Rescue Plan Act in March of 2021 and have led to an estimated three million additional individuals enrolling in Affordable Care Act (ACA) subsidized plans as a result. They include:
- Allowing individuals between 100-150% of the federal poverty level (FPL) to pay no premiums for a marketplace plan.
- Allowing some over 400% FPL to begin qualifying for subsidies.
- Reducing the cost of premiums at every income level by lowering premium percentage.
- Subsidizing 100% of the cost of COBRA plans to allow individuals and families to remain on their previous employer plans after losing their job.
Contact WHA Vice President of Federal and State Relations
Jon Hoelter with questions.