Schreder: Entrepreneurs, the American Rescue Plan and Health Insurance

Guest post by Lynn Schreder.

The American Rescue Plan (ARP), recently signed into law by President Biden, increases and expands eligibility for Affordable Care Act (ACA) premium subsidies for people enrolled in marketplace health plans. The law also creates new, temporary premium subsidies for COBRA continuation coverage; and it temporarily changes the rules for year-end tax reconciliation of marketplace premium subsidies. These changes will improve the affordability of coverage for individuals who are already enrolled in marketplace health plans, and will provide millions more an opportunity to newly sign up for coverage with increased financial assistance this year.

So, what does this mean to an entrepreneur?  

It means there is greater opportunity to obtain a more reasonably priced health insurance plan for the business owner and their family. In addition, all ACA plans are guarantee issue, meaning there are no health questions asked in order to obtain coverage.

In addition, the government created a Special Enrollment Period (SEP) for any eligible person to make changes or enroll in ACA coverage from Feb. 15th through May 15th, 2021.  Typically, the only time one can enroll into ACA coverage is from Nov. 1st through Dec. 15th each year for a Jan. 1st effective date.  Enrollment can occur at other times throughout the year due to special events, requiring documentation.

The easiest way to begin looking at options is to contact your local health insurance agent.  You can “find an agent” by accessing www.healthcare.gov and then click “Find Local Help”.

“Silver” health insurance plan sample rates:

  • A 35 year old single person making $40,000/year can expect to pay $211/month, using $256/month in premium tax subsidies paid by the federal government
  • Two 35 year old married people making $40,000/year in their household can expect to pay $109/month covering both spouses, taking advantage of the $826/month premium tax subsidy
  • A 28 year old single person making $25,000/year can expect to pay $38/month, using $378/month in a premium tax subsidy
  • A 40 year old with a 40 year old spouse and 2 kids, 10 and 12, making $140,000/year can expect to pay $992/month (equaling 8.5% of household income), using $572/month in a premium tax subsidy – prior to this new legislation, this family would not have qualified for a tax subsidy

In order to obtain subsidies, you must file a federal tax return for the year you are getting a subsidy and must not have an employer group health insurance plan offered (that meets quality and affordability requirements) to you or your spouse.

Here’s the bottom line:  if you own your own business or want to start a business, don’t let the cost of health insurance be your deterrent!  Check out your options – you might be pleasantly surprised!


Lynn Schreder is the owner and President of Khi Solutions.