From Your Lobbyist: ✨Relief is here✨
March 12, 2021
Week of Mar 8-12
This Week’s Events:
VICTORY! The House and Senate passed President Biden’s American Rescue Plan (ARP) that was signed into law on March 11th. This monumental law will provide $1.9 trillion in funding to support struggling Americans and young people affected by the ongoing fallout of COVID-19. ARP provides respectable levels of funding to adequately help families get back on their feet as our country continues to heal from this crisis.
As stated by AYA’s Executive Director Lisa Giordano: “The provisions in this law–– including direct support for families, relief aid for education, continued protections for student borrowers, and expanded healthcare benefits––are marked examples that Congress and President Biden are committed to the people of this country. The Association of Young Americans is incredibly pleased to endorse this progressive plan, which we truly believe will be a lifeline for millions of young people across the country. This is the kind of government our future generations need, and we look forward to advocating for the enactment of additional policies, like student debt cancellation, that will further aid our economic recovery and allow young Americans to participate meaningfully in a strong economy.”
ARP breakdown in relation to AYA’s issues:
Higher Education: ARP will provide $39.6 billion for emergency financial aid grants at higher education institutions to directly support struggling students in the wake of the pandemic. Funds could also be used to monitor and mitigate the spread of COVID-19 and for outreach to financial aid applicants regarding potential adjustments related to the pandemic. As a reminder, this is on top of the $14 billion for colleges and universities in last March’s CARES Act and the $22.7 billion in the relief package from December. In a huge win for AYA and the higher education community, the law excludes from taxable income any student loans discharged between Dec. 31, 2020 and Jan. 1, 2026. This means that if student debt is cancelled, borrowers will not have to pay more in taxes than they would actually repaying their loans. In another huge win, the measure would also modify the “90/10” rule, under which for-profit institutions that obtain more than 90% of their revenue from federal student aid become ineligible for federal support. It would expand the rule to include additional programs, including veterans’ benefits. The change would take effect for institutions for their fiscal years beginning after Jan. 1, 2023.
Stimulus Checks: The legislation would send a third round of stimulus payments of $1,400 per eligible individual. Singles earning up to $75,000 will get the full amount, with the payments phasing out completely by $80,000 in income. Couples making up to $150,000 will get $2,800 ($1,400 per person) with the payments declining at higher incomes and zeroing out altogether at $160,000. Children and adult dependents in those households are also eligible for $1,400 payments. The plan would also allow residents who are married to undocumented residents to receive stimulus payments, which was not allowed in prior rounds.
Unemployment Insurance: The legislation would extend supplemental unemployment benefits that are scheduled to run out March 14th. The bill extends the weekly federal benefit of $300 a week through Sept. 6th. The package also extends benefits for self-employed individuals and gig workers, along with those who have exhausted their regular jobless benefits. It also includes tax relief on the first $10,200 in unemployment payments for workers in households earning up to $150,000 a year. The change will prevent many people from receiving surprise IRS bills this spring.
Health Coverage, paid leave: 100% coverage for costs of continuing health insurance through September for laid-off workers. The plan would provide paid-leave benefits of as much as $1,400 per week and tax credits for employers with fewer than 500 employees to reimburse them for the cost of the sick time but it does not mandate employers have to offer paid leave.
Tax Credits under ACA: The measure would expand the Affordable Care Act’s premium tax credits for health insurance purchased through an exchange. The law provides refundable credits for households with income that’s 100% to 400% of the federal poverty level (FPL). For 2021 and 2022, the bill would eliminate premiums for individuals at 150% of the FPL or less, and reduce premiums for all other households. It also would make households above 400% of the FPL eligible, with a premium cap of 8.5% of income. The premium caps currently range from about 2% to 9.8%, and are adjusted annually for inflation. The measure would allow taxpayers who receive unemployment compensation in 2021 to be eligible for the credit without any premiums, by disregarding any income above 133% of the FPL. The measure also wouldn’t allow excess premium credits to be recaptured in 2020.
This is wonky, and we know it — so what does this mean for young people? Under existing law, current consumers who are 150% of FPL pay up to 4.14% of their income on premiums. That will now be $0. An example is a 21 year old with an income of $19,320 who is currently eligible for a subsidy of $3,500 under the ACA will now get $4,300, bringing their premium costs to $0 and saving them $1,800/year. An individual who makes up to $25,760 or a family of four that earns $53,000 will be required to contribute up to 2% of their income towards premiums, down from 6.52% they pay currently. So, a 24 year old who currently makes $25,759 annually and is paying around $1680 annually ($140/month) will now only pay $515 per year ($42/month) for the exact same coverage.Those who will benefit the most are those who make just over the poverty level as their premiums will go to $0. Anyone making over 400% of FPL or $51,520 for an individual or $106,000 for a family of four will be capped at 8.5% of their income. That is a max of $4,250.40 annually ($354.20/month). That compares to no cap at all under current law.
Cost-Sharing Subsidies: The law will allow individuals who receive unemployment compensation in 2021 to qualify for reduced cost-sharing under the ACA. The law requires insurers to reduce out-of-pocket costs, such as copays and deductibles, for enrollees whose income is between 100% and 400% of the FPL and who enroll in a silver plan through the law’s exchanges. The measure would disregard income that exceeds 133% of the FPL for purposes of determining the cost-sharing reduction amounts.