What You Need to Know NOW
Today, President Biden signed the $1.9 trillion American Rescue Plan into law, a massive piece of legislation that will be critical to helping women and their families recover after a year of the coronavirus pandemic. The last year has seen 2.3 million women leave the workforce, and countless more struggle with the stress of child care, remote schooling, and dangerous working conditions.
Many people know this bill as the third round of stimulus checks, providing $1,400 for single adults who make up to $75,000 and married couples who make up to $150,000. But there are a lot of other provisions in the legislation.
The bill, which is being hailed as the most ambitious anti-poverty initiative in a generation, also has significant benefits for middle-class Americans. Here are five things you need to know about the American Rescue Plan.
1. College students and elderly relatives are now eligible dependents.
The stimulus payments will be $1,400 for most recipients, with parents receiving the same payment for each of their children. Unlike previous rounds, taxpayers who have claimed college students or elderly relatives as dependents will be able to receive payments for them as well.
2. Health insurance, if obtained through COBRA or Obamacare, will be cheaper.
If you lost your job or had your hours cut, you can purchase health insurance from your former employer through COBRA, or the Consolidated Omnibus Budget Reconciliation Act. COBRA has notoriously high premiums, but thanks to the American Rescue Plan, the government will pay the full cost of COBRA premiums for six months (April – September 2021).
And if you bought your own health insurance through a government exchange, also known as Obamacare, you can expect increased subsidies for the next two years. Depending on your age, location, and income, the total amounts will differ. Someone earning around $20k should be able to sign up for a plan with no monthly payment, while someone earning around $50k could see premiums lowered by as much as $1,000 a month.
3. Families with children will receive a guaranteed monthly income this year – and perhaps permanently.
The bill expands the child tax credit for this year, increasing benefits up to $3,600 per child for children under 6 and $3,000 per child for children ages 6 to 17. Similar to the stimulus payments, the expanded credit will phase out for individuals making more than $75,000 and married couples earning more than $150,000. Most importantly, the payments will be made monthly, not annually as in the past. The bill is expected to cut child poverty in half, and Democrats are hoping to make the expansion permanent.
4. Child care subsidies have increased.
For this year, the bill also expands the child and dependent care tax credit, which parents receive to subsidize the cost of care for children under 13 and other dependents. In short, more families will be eligible, and many recipients will get a bigger break.
5. Employers who voluntarily provide paid sick and family leave to employees who need to take time off for the virus will get a tax break this year.
Unfortunately the law that mandated employers provide such leave expired at the end of last year. But this legislation extends the tax breaks that encourage employers to do so through September of this year, and it includes any time needed to receive the coronavirus vaccine.