What the COVID-19 relief bill means for retirees
Most will receive $1,400 checks; legislation also expands Medicaid home-based health care and addresses the multiemployer pension crisis.
The sweeping American Rescue Plan Act legislation signed into law this week by President Biden touches most Americans in one way or the other, and older people are no exception. Here’s a summary of key provisions impacting retirees and those getting close to retirement.
Relief payments: Most seniors will receive the one-time $1,400 payment authorized under the law - it goes to people with up to $75,000 in adjusted gross income. The payments phase out between $75,000 and $80,000 of AGI (for joint filers, the phaseout occurs from $150,000 to 160,000 in AGI). Most seniors have AGI below those levels, and they can expect a check.
Home-based health care services: The law provides approximately $12 billion in dedicated emergency funding earmarked for expansion by states of Medicaid home and community-based services for one year.
The pandemic has taken a horrific toll on nursing homes and long-term care facilities, which have accounted for roughly 35% of all COVID-19 deaths. Occupancy rates in these facilities have fallen sharply in response, and there is heightened demand for home-based care. The federal Medicaid program has long been the nation’s largest funder of long-term care, but from its inception, the program has tilted toward care in nursing homes and other long-term care facilities, rather than home-based care. Funding has shifted in recent years, with perhaps half of long-term dollars spent on community-based care, up from 20 percent 15 years ago. The American Rescue Act marks a major turning point, fueling this trend further - especially if the funding is made permanent.
Multiemployer pension bailout: The rescue act provides up to $86 billion in grants to pay full benefits to participants in multiemployer pension funds.
More than one million workers in these plans have been facing the risk that their retirement benefits could be slashed owing to a meltdown of some plans. These are traditional defined benefit plans that were created under collective bargaining agreements; they are jointly funded by groups of employers. Congress has been working on ways to protect the benefits promised to pensioners. Before the election last November, Democrats had favored a package of low-interest loans to prop up the funds, while Republicans want to boost insurance premiums paid by employers, add new premiums paid by plan participants, and force more-conservative accounting assumptions. The rescue act goes much further, providing up to $86 billion in grants to pay full benefits.
This provision of the act really reflects the changed political climate. As one industry source told me this week: “Lawmakers came to the realization that we’ve bailed out the banks and the airlines over the years - we have the votes, why aren’t we doing that here?”
And, they did.
Subscribe to the newsletter
You’re subscribed to occasional, short posts sent to my free list. Sign up for the paid edition to receive my weekly in-depth report, plus online access to my series of retirement guides.