What to expect from the American Rescue Plan - Paycheck

What to expect from the American Rescue Plan

            President Joe Biden signed the American Rescue Plan (ARP) into law on March 11. Democrats hailed the plan as groundbreaking for working Americans struggling near the poverty line, while Republicans have criticized it as a potential financial disaster. But many Americans in financial need will benefit in some way from the $1.9 trillion bill.

Stimulus checks

            As of March 20, over 90 million Americans already received stimulus checks. The checks are $1,400 per person, and this time each dependent will also receive that full amount. It means a family of four with income less than $150,000 per year will receive $5,600. Single-parent households earning less than $120,000 will receive full stimulus checks. Individuals who earn over $75,000 and couples earning over $150,000 will still receive checks, but they’ll be scaled back. Individuals who earn $80,000 or more and couples earning more than $160,000 will not receive payments.

Health insurance through ACA

            The Affordable Care Act will expand under the ARP act to especially benefit middle-income people. Subsidies for purchasing health insurance will expand. For example, Alan Rappeport reported in The New York Times that the monthly payments of a 64-year-old with an income of $58,000 would drop from $1,075 to $412. His information came from the Congressional Budget Office. Upper-middle-income Americans will also benefit. Plans purchased on the government exchange will cost at most 8.5 percent of a person’s adjusted gross income.

            The ARP act also expands COBRA, which enables newly unemployed people to purchase their former employers’ health benefits. COBRA benefits will be fully paid through September 2021.

Pension rescues

            Pensioners will also benefit as the ARP act has set aside $86 billion to shore up failing multiemployer pensions. About 185 union pension plans for truck drivers, builders, retail clerks, and others are near collapse. The money allotted to bail out these pension plans will benefit 10.7 million workers, both active and retired, by funding their full pensions for the next 30 years.

Parents and children

            Parents with dependent children will benefit from changes to existing tax policies targeted especially to them. The biggest change to the 2021 child tax credit means an increase to $3,600 (children under 6) and $3,000 (children under 17) per child, up from $2,000. This expanded credit phases out for persons earning more than $75,000 and married couples earning over $150,000. It stops for individuals with $200,000 and couples with $400,000 incomes. The tax credit will now be fully refundable, so those whose incomes don’t meet previous levels to get the full credit now will. The payments will be paid in monthly installments, according to the Children’s Defense Fund.

            Childcare subsidies also expand under the ARP act. The bill increases subsidy amounts to $4,000 for a qualifying individual and $8,000 for a qualifying couple. Those levels were previously 20 to 35 percent of eligible expenses and maxed out at $2,100. The Center for Law and Social Policy estimate that Wisconsin will receive $223,211,539 in expanded childcare assistance and another $357,004,446 in childcare stabilization funds.

What’s missing

            The Senate trimmed the expansive ARP bill passed by the House. The signed bill was absent Mr. Biden’s plans to increase the minimum wage. The original bill included stimulus checks for higher-income Americans, but that was trimmed. Plans to increase unemployment payments to $400 remain at $300 per week.

            Senate changes did help people who lost jobs. Its version extended unemployment payments an additional week, to September 6. It covered 100 percent of COBRA payments through September.

Georgia Beaverson

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