American Rescue Plan Act COBRA Subsidies

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (“ARPA”), which includes provisions for COBRA subsidies that will apply to self-funded and fully insured plans, multi-employer plans and governmental employer plans.

The ARPA will subsidize 100% of the cost of premiums for COBRA continuation coverage for an employee or dependent who is a qualified beneficiary due to an involuntary termination or reduction in hours. It will not apply to employees who voluntarily terminate their employment or extend an individual's eligible COBRA coverage period. It requires the employer, plan (for multiemployer plans) or insurer (for fully insured coverage) to pay the COBRA premium cost of eligible individuals for the 6-month subsidy period from April 1, 2021 through September 30, 2021. The employer or plan will then be able to recover the cost of the COBRA coverage premiums through tax credits or refunds.

Full text of the ARPA is available here:

Categories: Healthcare