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American Rescue Plan Act FAQs

How the American Rescue Plan Act and Inflation Reduction Act enhanced subsidies from 2021 through 2025—and what changed when they expired on December 31, 2025.

What is the American Rescue Plan Act?

The American Rescue Plan Act (ARPA) is a federal law passed in March 2021 that significantly expanded health insurance subsidies and made coverage more affordable through Covered California. The Inflation Reduction Act, passed in August 2022, extended these benefits through 2025. They expired on December 31, 2025, and Congress did not renew them.

Key Features of the American Rescue Plan (2021–2025):

  • Increased subsidies: More financial help for low and middle-income families
  • Eliminated income cap: Households above 400% FPL qualified for assistance (the 400% "subsidy cliff" returned in 2026)
  • Lower premiums: No one paid more than 8.5% of income for the benchmark Silver plan
  • Unemployment protection: Special benefits for those receiving unemployment compensation (through 2025)
  • Expired December 31, 2025: Subsidies reverted to pre-2021 levels starting in 2026

How much more could I save with enhanced subsidies?

From 2021 through 2025, the American Rescue Plan significantly increased the amount of financial assistance available through Covered California. During those years, most households saved hundreds or even thousands of dollars per year on their health insurance premiums.

Income Level Old Cap Enhanced Cap (2021–2025) Potential Savings
Up to 150% FPL 3.1% - 4.1% 0% $0 premiums
150% - 200% FPL 4.1% - 6.5% 0% - 2% Up to 70% savings
200% - 250% FPL 6.5% - 8.3% 2% - 4% Up to 50% savings
250% - 400% FPL 8.3% - 9.8% 4% - 8.5% Up to 30% savings
Above 400% FPL No subsidy 8.5% cap Eligible 2021–2025

Who was newly eligible for subsidies?

From 2021 through 2025, the American Rescue Plan removed the "subsidy cliff" that had cut off financial assistance for households earning more than 400% of the Federal Poverty Level (FPL). The cliff returned in 2026—households above 400% FPL once again receive no federal premium tax credit.

Eligible 2021–2025

Middle-class families who previously earned too much (and, as of 2026, do again):

  • Single person earning over $51,520
  • Family of 2 earning over $69,680
  • Family of 4 earning over $106,000

*2024 income limits for reference

8.5% Income Cap (2021–2025)

Through 2025, no one paid more than 8.5% of income for the benchmark Silver plan:

  • $75,000 income = max $531/month
  • $100,000 income = max $708/month
  • $150,000 income = max $1,063/month

*For benchmark Silver plan coverage

This change was especially beneficial for older adults aged 50-64, who often face the highest premiums but don't yet qualify for Medicare. With the cliff back in 2026, this group is among the hardest hit by the loss of enhanced subsidies.

What special benefits were available if I received unemployment?

From 2021 through 2025, if you received unemployment compensation at any point during the year, you could qualify for maximum subsidies regardless of your actual income. This provision expired after 2025.

Important Unemployment Benefit

From 2021 through 2025, anyone who received at least one week of unemployment compensation during the year was treated as having income at 133% of the Federal Poverty Level, which meant:

  • $0 monthly premiums for Silver 94 plans (highest level of coverage)
  • Maximum cost-sharing reductions (lowest deductibles and copays)
  • Applies even if your income is higher than 133% FPL

How to claim this benefit:

  1. Report that you received unemployment compensation when applying or updating your Covered California application
  2. Provide documentation of unemployment benefits (like Form 1099-G)
  3. The enhanced subsidies will be applied automatically

How does ARPA help with COBRA coverage?

The American Rescue Plan provided temporary COBRA premium assistance for eligible individuals who lost employer-sponsored health coverage.

Compare Your Options:

Factor COBRA Covered California
Monthly Cost Full premium + 2% admin fee Often lower with subsidies
Subsidies Available No (subsidy ended 9/30/21) Yes, enhanced through 2025
Network Same as employer plan Multiple options available
Duration 18-36 months maximum No time limit

Recommendation: Most people still save money by switching from COBRA to a Covered California plan. Run your numbers with the calculator to compare 2026 costs.

How long did the American Rescue Plan benefits last?

The enhanced subsidies and expanded eligibility were in effect from 2021 through December 31, 2025, thanks to the American Rescue Plan and the Inflation Reduction Act passed in August 2022. Congress did not renew them, so they expired at the end of 2025.

Timeline of Benefits
  • March 2021: American Rescue Plan Act signed into law
  • April 2021: Enhanced subsidies became available
  • 2021-2022: Original ARPA benefits period
  • August 2022: Inflation Reduction Act extends benefits through 2025
  • 2023-2025: Enhanced subsidies in effect
  • December 31, 2025: Enhanced subsidies expired
  • 2026: Subsidies reverted to pre-2021 rules; the 400% FPL cliff returned

Check Your 2026 Costs

Even without the enhanced subsidies, you may still qualify for help if your income is between 138% and 400% FPL. Use the calculator to see your actual 2026 premium and any subsidy you qualify for.

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