This past Thursday, President Biden signed the “American Rescue Plan” into law, capping two months of work on this $1.9 trillion COVID-19 relief bill. While this legislation touches nearly every aspect of the economy and will have an impact far beyond our nation’s immediate recovery from COVID-19, we wanted to highlight a few provisions that may be of interest to Medical Alley Association members:
- Medicaid coverage post-partum for new mothers. Provides matching funds, for the next five years, to states that expand Medicaid for up to 12 months post-partum for new mothers. The Medical Alley Association strongly supported inclusion of this provision in the American Rescue Plan and is advocating for the State of Minnesota to make this expansion during this state legislative session.
- Expanded ACA premium tax credits. The bill accomplishes this in several different ways. One is through expanding eligibility for Premium Tax Credits (PTCs), for two years, by eliminating the ‘subsidy cliff’ for those above 400% of the Federal Poverty Level (FPL) and capping an individual’s premium at 8.5% of income. Note that there is no upper income limit on application of this cap. Another method is by increasing the subsidies for those already eligible for PTCs, by reducing the cost-sharing required, starting by fully covering premiums for those with incomes between 100% – 150% of FPL and increasing up to a maximum of 8.5% (as noted above), which is down from 9.78% for those between 300-400% of FPL.
- 100% subsidization of COBRA premiums. Individuals do not have to pay any premiums and employers can claim a refundable tax credit against its Medicare payroll tax liability for the premiums. This subsidy begins on April 1, 2021 and lasts through September 30, 2021. This subsidy is only for those who are involuntarily terminated or have had their hours reduced. Note that this doesn’t modify eligibility requirements or limitations for COBRA.
- Removing the cap on Medicaid rebates from drug manufacturers. Under current law, the maximum rebate drug manufacturers pay to Medicaid for all covered outpatient drugs – brand name and generic – is 100% of average manufacturer price. The American Rescue Plan removes that cap starting on January 1, 2024.
- Additional funding for vaccines and critical materials. The bill allocates an additional $6.1 billion for research, development, manufacturing, and production of vaccine and ancillary supplies. It also provides $10 billion for the production and purchase of critical materials under the Defense Production Act (DPA).
- Funding for State and Local Governments. The bill included $350 billion for state and local governments to help manage the economic fallout from the COVID-19 pandemic and related shutdowns. Of this amount, the state of Minnesota will receive $2.55 billion (local governments throughout the state will receive $2.1 billion). Combined with an over $1.6 billion state budget surplus, the state has significant resources to aid individuals and businesses impacted by the pandemic.
- However, due to a late amendment, the American Rescue Plan prohibits states that accept the federal money from cutting taxes – directly or indirectly. This could have a significant impact on Minnesota’s effort to exempt Paycheck Protection Program (PPP) funds and Supplemental Unemployment Insurance payments from state income taxes. It could also harm efforts to secure consistent funding for the Angel Tax Credit Program. The Medical Alley Association will be working with the Biden administration, Minnesota’s congressional delegation, and state legislators to identify a solution that benefits individuals and business across Minnesota as we look to continue our economic recovery.
The Medical Alley Association is regularly communicating with members of Congress and administration officials on the impact that existing laws or proposed legislation or regulations have on Medical Alley organizations. Please reach out and let us know if you have questions or concerns about this bill, or if there are any policy or regulatory issues or challenges that your organization encounters; we’re ready to help.