Last week, the House passed the American Rescue Plan Act of 2021 (ARPA). The $1.9 trillion relief package’s current proposals would change health coverage programs, including Medicaid, health insurance marketplaces, and continuation coverage offered through the Consolidated Omnibus Budget Reconciliation Act (COBRA).
If enacted, the changes could have significant ramifications for states and individuals served by these programs. States should be prepared to act quickly to implement and/or respond to the changes, some of which will be effective immediately upon passage.
ARPA is now before the Senate, which may make modifications and will review its provisions to determine if they meet budget reconciliation rules. Both House and Senate leadership have expressed strong interest in quickly passing the legislation, with passage possible by mid-March.
The following highlights key proposed Medicaid and Children’s Health Insurance Program (CHIP) changes as well as provisions designed to help increase access to affordable care for individuals who have lost employer-sponsored insurance.
Key Medicaid and CHIP Provisions
Coverage of COVID-19 vaccines and treatment under Medicaid and CHIP:
- Requires Medicaid and CHIP coverage of COVID-19 vaccines and treatment without cost sharing for all eligible enrollees;
- Increases federal medical assistance percentage (FMAP) to 100 percent for vaccine administration for one year after the end of the public health emergency (PHE); and
- Provides an option for states to provide coverage of COVID-19 vaccines and treatment without cost sharing for uninsured individuals at 100 percent FMAP.
Option to provide additional Medicaid and CHIP postpartum coverage:
- Allows states to extend Medicaid or CHIP coverage for 12 months after childbirth. (This option would be available for seven years).
Enhanced FMAP for mobile crisis intervention services:
- State option would provide Medicaid coverage for qualifying community-based mobile crisis intervention services.
- Provides 85 percent FMAP for these services. (This option would be available for five years.)
Temporary FMAP increase to incentivize Medicaid expansion:
- Provides 5 percentage point FMAP increase to states’ base FMAP rates for eight calendar quarters to states that opt to implement the Affordable Care Act’s Medicaid expansion after enactment of the American Rescue Plan. (This increase is in addition to the temporary 6.2 percentage-point FMAP increase available during the PHE provided by the Families First Coronavirus Response Act)
- FMAP increase applies to all Medicaid eligibility groups except the expansion group. Newly expanding states would receive the current 90 percent FMAP provided for the expansion group.
Temporary extension of 100 percent FMAP for care provided at Urban Indian Organizations and Native Hawaiian Health Care Systems:
- Provides 100 percent FMAP for eight calendar quarters for services provided at Urban Indian Health Programs or the Native Hawaiian Health Care System to Medicaid enrollees.
Sunset of Medicaid Drug Rebate Limit:
- Beginning in calendar year 2023, this provision would eliminate the cap on Medicaid drug rebates.
Temporary enhanced FMAP for home- and community-based services:
- Provides 7.35 percentage-point FMAP increase for one year to help states implement improvements to Medicaid home- and community-based services.
Creation of state strike teams for nursing facilities:
- Provides $250 million to the US Department of Health and Human Services for states to create strike teams to help nursing facilities manage COVID-19 outbreaks.
Key Private Market Coverage Provisions
Support for continuation coverage through COBRA:
- Provides federal funding so that individuals would only have to pay 15 percent of their premiums toward COBRA coverage. COBRA allows individuals who have experienced job loss to continue enrollment in their employer-sponsored health insurance plan for a period of up to 36 months. Normally, individuals pay 100 percent of COBRA premiums. Federal funding will be available through Sept. 30, 2021.
- Requires employers to provide updated information to qualifying employees about the program and be prepared to expedite review for any employees who are denied premium assistance.
Enhanced tax credits to purchase coverage through health insurance marketplaces:
- Provides a two-year enhancement to premium tax credits (PTCs) available to eligible individuals who qualify to purchase coverage through health insurance marketplaces. The enhancements both increase the amount of PTCs available at all income levels and eliminate the 400 percent earnings (of federal poverty level – FPL) limit to qualify for PTCs.
- Funding would cap monthly premiums at no more than 8.5 percent of an individual’s income.
- The PTC enhancements would be available for the 2021 and 2022 plan years. Individuals who are currently enrolled in marketplace coverage would be eligible for rebates to cover expenditures already made toward 2021 coverage.
- Disregards income above 133 percent of FPL for purposes of calculating eligibility for PTCs for any individual who receives unemployment compensation in 2021.
- For more information about these proposals, read the February, 2021 National Academy for State Health Policy (NASHP) blog, Congressional Proposals Could Improve Coverage Affordability and Access for Millions.
NASHP will follow the American Rescue Plan Act as it moves through Congress and will continue to share information on provisions that are critical to states.