On March 11, 2021, President Joe Biden signed the $1.9 trillion COVID-19 pandemic relief package. “The American Rescue Plan Act of 2021” (HR 1319) will provide both economic and health care assistance to millions of Americans.
Below is a summary of the legislative package as it relates to health care.
Aid to State and Local Governments
- Provides $350 billion to help states and local governments cover increased expenditures, replenish lost revenue and mitigate economic harm from the COVID-19 pandemic through December 31, 2024. Funding can be used to help small business physician practices.
$92 billion for COVID-19 Public Health Services and Provider Assistance
- $8.5 billion to the CARES Act Provider Relief Fund for rural providers.
- $12.7 billion to the CDC for vaccine distribution.
- $48 billion for testing, contact tracing and personal protective equipment (PPE).
- $7.6 billion for state/local public health departments to bolster the public health workforce.
- $7.6 billion for community health centers to serve underserved communities of color.
- $6.5 billion for Substance Abuse and Mental Health Services.
- $200 million to support COVID-19 infection control in skilled nursing facilities.
Small Business Assistance
- $15 billion in new funding for targeted economic injury disaster loan (EIDL) small business grants.
- Numerous extensions of tax credits and other tax clarifications.
Medicaid (Medi-Cal) Funding
- Requires state Medicaid programs to cover vaccines and COVID treatment without any cost sharing until one year after the end of the public health emergency.
- Increases the federal Medicaid assistance percentage (FMAP) matching funds to 100% for vaccine costs during this period.
- Provides a five-year state plan option of health coverage for women enrolled in Medicaid for 12 months after the birth of a child.
- Outpatient drugs used for COVID-19 treatment must be included in the Medicaid drug rebate program.
- Starting in 2024, eliminates the cap on the drug rebate amount that pharmaceutical manufacturers are required to pay Medicaid for covered drugs, increasing the rebates owed to Medicaid.
- Increases federal matching funds for several programs within Medicaid.
ACA and COBRA Coverage Funding Assistance
- Subsidizes 100% of COBRA insurance premiums through September 30, 2021, for individuals who lost their jobs or had reduced hours. Employers or health plans may also claim a refundable tax credit against their Medicare payroll tax liability for the cost of the premiums.
- Provides nearly $35 billion in refundable tax credits and premium assistance for those enrolled in Affordable Care Act (ACA) Exchange health plans (Covered California) for two years as follows:
- Expands the ACA refundable tax credits for individuals above 400% of the federal poverty level (FPL) – ~$50,000 for an individual – flattening the ACA Subsidy “cliff.” Caps premium costs at 8.5% of income.
- Eliminates ACA insurance premiums for those individuals between 100%-150% of FPL.
- Increases the ACA premium subsidy for those individuals between 150%-400% of FPL.
- Provides $20 million in HHS grants to states to modernize ACA exchanges.