The American Rescue Plan will save millions of dollars for Vermonters who buy health insurance on the state exchange, according to officials.
The newly enacted federal stimulus package dramatically expands access to tax credits that subsidize health insurance, effectively cutting the cost of health care for thousands of Vermont residents across nearly every income level.
“The big message I think for Vermonters is that this is a really good thing,” said Addie Strumolo, deputy commissioner for the Department of Vermont Health Access.
The law caps the cost of health insurance at 8.5% of household income. That means all but the wealthiest Vermonters will get a discount. A family of four with up to $265,000 in annual income is eligible, as is an individual making as much as $95,000, according to Strumolo. The package also includes additional benefits for low-income families and allows workers who lose their jobs to extend health insurance coverage.
Before Congress passed the bill and President Joe Biden signed it into law last month, only Vermonters with income at or below 400% of the poverty line who buy insurance on Vermont Health Connect could get financial assistance from the federal government. That left a “cliff” for those just over that line, according to Mike Fisher, the state’s chief health care advocate. Anyone who made just over that 400% threshold often ended up paying a “substantial amount of their income on health insurance,” he said.
Fisher called the changes a “tremendous improvement” over the status quo.
For instance, a couple who made $60,000 — about 348% of the poverty line — and purchased the benchmark silver plan on the exchange previously qualified for $847 in health insurance subsidies, according to Sean Sheehan, senior policy and implementation analyst for the Department of Vermont Health Access. Following enactment of the American Rescue Plan, they now qualify for $979 in subsidies a month — an extra $130 in savings.
The benefits won’t be applied until later this summer, after the department has completed necessary IT upgrades. Then the discounts can be averaged out in the form of discounts over the remaining months of the year or applied in form of tax credits when Vermonters file their 2021 taxes, said department spokesperson Nissa James.
An uptick in enrollment
The Department of Vermont Health Access likely will see a surge in interest in its offerings, Strumolo said.
Currently, 24,000 Vermonters get their insurance through the exchange, and 20,000 of them already get subsidies and can qualify for more substantial savings under the law.
Among the Vermonters who may take advantage of the new discounts are the state’s roughly 20,000 uninsured residents and the 7,500 people who bypass Vermont Health Connect and buy coverage directly from the insurance companies.
Such an influx could pose technical challenges for the state. Its exchange, Vermont Health Connect, has had a history of glitches and technical failures since it was built in 2013.
Sheehan said enrollment remains open, and staff will be working in the coming months to complete the IT upgrades that would allow members to compare possible plans and to receive notifications of the benefits available to them.
The department has “focused on continuous quality improvement over the last four years,” James said, and has dealt with customer issues promptly.
The changes, however expansive, are temporary, as they extend only through 2022. Democrats in Congress are betting that the benefits will be popular enough that they can cement them into law.
The uncertainty makes it “more complicated” to plan for, Strumolo said, but she also thinks the benefits will prove too popular to withdraw. Such a retraction would be “very challenging, to say the least, and very problematic to those benefiting from the increased subsidies,” she said.
As long as they last, the benefits will be myriad, Fisher said.
The changes will insulate Vermonters from health insurance rate increases, creating more stability around health care premiums, he said. He suggested people who now receive health insurance through their employer might instead buy through the exchange.
Ultimately, cheaper health care should make people healthier, Fisher said. People go to the doctor more when “health insurance affords people good, robust health care without exorbitant costs.”
Clarification: This post has updated with additional information provided by the Department of Vermont Health Access post-publication about when the benefits will be available.
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