The American Rescue Plan Act of 2021 (ARPA) included a provision for a federally-financed Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy from April 1, 2021 through September 30, 2021.
The subsidy is available to qualifying employees who involuntarily lost their jobs or had significantly reduced hours. This applies to:
- Individuals who were previously eligible for COBRA continuation that would have extended into the subsidy period, but who did not elect COBRA coverage.
- Individuals who previously elected COBRA continuation but dropped coverage that would have extended into the subsidy period.
- Individuals who become eligible due to involuntary termination or reduction in hours during the subsidy period.
Individuals who qualify for the COBRA subsidy will not be required to pay COBRA premiums for eligible coverage during the subsidy period. Instead, the group health plan will be responsible for covering the premiums during the subsidy period and will be reimbursed via credits against certain payroll taxes.
Group health plans will be required to provide several specific notices to eligible individuals. As such, Employers should begin working with COBRA administrators to identify any eligible individuals.
More detailed information is expected from the Department of Labor (DOL) within the coming weeks. If you have any questions as it pertains to your situation, please contact your benefits administrator.