The latest COVID-19 relief package, known as the American Rescue Plan Act of 2021, provides $1.9 trillion in mandatory funding, program changes and tax policies aimed at mitigating the continuing effects of the pandemic.
Congress passed the measure through reconciliation, a once-per-budget process that allows Congress to address shortfalls or gaps. Members are prohibited, however, from including policy changes that aren’t directly tied to budgetary concerns. (NCSL has produced a broad summary of the package.)
Below is a breakdown of the funding and provisions included in the act for health and human services.
• $8.5 billion for vaccine activities at the Centers for Disease Control and Prevention, including supplemental funding for state and locality distribution grants.
• $7.66 billion for state, local and territorial public health departments to establish, expand and sustain their public health workforce.
• $3 billion for block grant programs for the Substance Abuse and Mental Health Services Administration.
• $6.09 billion to the Indian Health Service. (Read a full list of health funding here and learn about initial predictions for state allocations here.)
• $39 billion for child care.
• $150 million in additional funding for the Maternal, Infant, and Early Childhood Home Visiting Program.
• $1 billion for the Pandemic Emergency Fund, which provides one-time benefits such as cash and vouchers to eligible families with low incomes.
• $1.5 billion for the Community Mental Health Services Block Grant program for 2021.
• $1.5 billion for the Substance Abuse Prevention and Treatment Block Grant program for 2021.
• $350 million for programs under the Child Abuse Prevention and Treatment Act.
• $10 million to establish a National Technical Assistance Center on Grandfamilies and Kinship Care.
Health Policy Provisions
Within the bill were several health overhauls regarding Medicaid, Medicare and health insurance coverage. Now, Medicaid and the Children’s Health Insurance Program (CHIP) will cover vaccines and COVID treatment without any cost sharing, increasing the Federal Medical Assistance Percentage (FMAP) to 100% for vaccine costs. The law also provides states a five-year option to cover women enrolled in Medicaid for 12 months after the birth of a child; previous coverage was for 60 days. The bill provides a temporary, two-year, 5 percentage point increase in the FMAP to states that enact the ACA’s Medicaid expansion as they cover the newly eligible adult populations. Other temporary changes include an 85% FMAP for the first three years a state covers mobile crisis intervention services for mental health or substance use disorders and an increase in the federal FMAP by 10 percentage points for state expenditures on home- and community-based services for four fiscal quarters.
On provider provisions, the bill modifies Medicaid allotments for disproportionate share hospitals (DSH) to account for the current 6.2 percentage point increase in states’ FMAP that was passed under the first COVID relief bill. HHS is ensuring that total DSH payments a state can make in a fiscal year are equal to the total payments it could have made without the FMAP increase. It also creates a rural provider fund with $8.5 billion.
Several changes address insurance coverage and ACA premiums. For individuals who lost their jobs, premiums will be subsidized at 100% through Sept. 30, 2021, with no requirement for individuals to pay premiums. The employer or health insurer will be able to claim a refundable tax credit against its Medicare payroll tax liability for the costs of the premiums. When individuals become eligible for coverage, a $250 penalty will be imposed if they do not notify their plans.
ACA premium tax credits and insurance purchased through an exchange will be expanded, and there will be refundable credits provided for households with income that is 100% to 400% of the federal poverty level. There will also be a cap on health insurance premium costs based on a percentage of an individual’s income, with a credit to cover any amount that goes above it, up to the cost of a “benchmark” insurance plan. These were just a few of the provisions to address premium and out-of-pocket costs for certain households wanting to enroll in a marketplace or exchange plan.
Human Services Provisions
In addition to funding, the bill also made changes related to human services.
With states starting to reopen, access to quality and affordable child care has remained a focus in Congress, which included significant funding and policy provisions to address the issue. The Child Care Development Block Grant (CCDBG) Act, which is administered to states, territories and tribes to assist low-income families, is the largest source of funding to states for child care. In the legislation, Congress included an additional $15 billion for CCDBG and an additional $25 billion for child care stabilization grants providing emergency funding for child care provisions. Along with the $39 billion in funding for child care, the law also includes a change to the Social Security Act to increase total Child Care Entitlement to States (CCES) funding from $2.9 billion to $3.05 billion per year (an increase of $130 million annually). The bill also includes language that temporarily waives state matching funds for CCES in 2021 and 2022.
The act includes new tax provisions that will directly affect children and families. Among these changes are raises to the maximum Earned Income Tax Credit (EITC) for adults without children from $543 to $1,502. It also lowers the age eligibility for the childless EITC from 25 to 19 and eliminates the upper age limit, which currently bars the credit for childless people age 65 and older.
Other changes include eliminating a rule that bars individuals who have children without Social Security numbers from claiming the childless EITC and allowing individuals who are separated from their spouses to claim the EITC on a separate return if they live with their child for more than half of the year. In addition, the Child Tax Credit maximum amount was increased to $3,000 per child and $3,600 for children under age 6 with an extension on the credit to 17-year-olds. Other changes include making the CTC fully refundable, meaning the entire credit could be provided as a refund if it exceeds an individual’s income tax liability, instead of being partially refundable under current law. Under the cash payment program, parents will get 50% of the credit in monthly payments from the U.S. Treasury via direct deposit starting in July and running through December 2021.
As with any larger federal relief bill, the funding and details for states are yet to come. NCSL continues to educate federal partners on the large scale undertaking states face in implementing these changes and on the need for flexibilities in making them to the best of their abilities.
Haley Nicholson is senior policy director, health, in NCSL’s State-Federal Program. Margaret Wile is a policy director in NCSL’s Health and Human Services Program.