Not just $1,400 checks: Major health care perks from the stimulus law could save you money
The new stimulus law could save you thousands on COBRA, health insurance and FSA plans in 2021. Here's what to know.
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Managing Editor Alison DeNisco Rayome joined CNET in 2019, and is a member of the Home team. She is a co-lead of the CNET Tips and We Do the Math series, and manages the Home Tips series, testing out new hacks for cooking, cleaning and tinkering with all of the gadgets and appliances in your house. Alison was previously an editor at TechRepublic.
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In 2021, the average cost of health insurance in the US is nearly $500 per person per month, according to Value Penguin, and associated costs can add up incrementally or all at once, including expensive premiums and taxes when you buy medication and other personal health items. The stimulus law provides new options for people who need health insurance and resources to help lower costs for those who are already insured.
COBRA insurance premiums are free through September
Typically, if you lose your job, you can buy insurance coverage through your former employer under the government COBRA (Consolidated Omnibus Budget Reconciliation Act) program. However, you typically have to pay the full price for that insurance, which can be very costly. Under the March law, the government will pay the entire COBRA premium from April 1 through Sept. 30 for laid-off employees and family members. (However, you're not eligible if you have Medicare, if you left your job voluntarily, or if you qualify for new, employer-based health insurance somewhere else before that date.)
The stimulus law requires employers to send former workers who qualify for COBRA a notice of eligibility. But if you haven't gotten that, you can call your former employer to make sure you are signed up for coverage.
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You can sign up for less expensive health insurance now
Under the stimulus bill, you may be eligible for new short-term health insurance subsidies to buy coverage on HealthCare.gov. Nearly everyone who buys their own insurance through the Affordable Care Act will be eligible for a discount, according to a New York Times report.
The bill broadens the subsidies available under the ACA for health insurance, so people who are already eligible can receive more, and those whose incomes were previously too high to qualify can also get assistance. For example, if your annual income is around $19,000, you'll be able to sign up for a plan with no monthly payment. If you earn over $51,000, your premium could get lowered by as much as $1,000 a month in some markets, the Times reported. (For most people, eligibility for subsidized health insurance is calculated using your household's modified adjusted gross income, according to the UC Berkeley Labor Center.)
To get the new benefits, you need to sign up for plans at HealthCare.gov, or, for some states, their own insurance marketplace websites. The changes will be retroactive to Jan. 1, 2021. So if you're already on a medical plan through the Affordable Care Act, you'll get money back as a refund when you file your 2021 tax return next year.
The American Rescue Plan Act funds these new subsidies for two years.
Deduct larger medical expenses on your taxes
Some medical expenses are tax-deductible -- and Congress passed a more generous allowance for what you can deduct as part of the December stimulus law.
Instead of capping expenses that exceed 10% of your adjusted gross income, as was originally planned, you can now deduct medical expenses that exceed 7.5% of your AGI. You can find the full list of medical expenses you can deduct on the IRS website, including doctor's fees and inpatient hospital care.
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Add more money tax-free to your flexible health spending plan
If you have a health care FSA, good news: The limit for tax-free contributions has increased to $2,750 -- up $50 from last year. The change was part of the IRS's annual inflation adjustments. That means you can contribute more money to your account without getting taxed on it.
Use open insurance enrollment through this August
While you usually need to wait for the six-week open enrollment period each fall to sign up for health insurance, the American Rescue Plan Act created a special enrollment period that runs through mid-August.
Most state marketplaces have done the same. That means you can go to HealthCare.gov or your state option and sign up for insurance now if you need to, and can take advantage of the new subsidies and changes. This can save you money by letting you sign up for a lower-cost plan sooner.