ARPA contains a provision for a 6-month subsidy period (April 1 to September 30, 2021) for “assistance eligible individuals” (AEI) who, due to job loss, may qualify for a 100% subsidy for COBRA coverage. Individuals eligible for the program will pay no cost for monthly COBRA premiums for medical, dental, or vision coverage if they are eligible for COBRA coverage during the subsidy period.

Employers are obligated to participate. All group health plans must provide this subsidized coverage. Employers must provide subsidized COBRA coverage and pay or incur the AEI’s COBRA premium cost for up to six (6) months. However, employers will recover the cost by claiming a credit against its quarterly Medicare payroll tax liability. The credit can be advanced and refundable to the employer if the subsidy paid exceeds the taxes due.

Only those who suffer an involuntary termination of employment or a reduction in hours and whose current COBRA continuation coverage period would overlap with all or some of the subsidy period are eligible, and only if they elect COBRA coverage. Individuals who qualify for COBRA because of voluntary termination, retirement, or death would not qualify for the subsidy.

ARPA also extended the amount of time to elect COBRA coverage if they previously declined COBRA coverage. ARPA COBRA coverage will end if the recipient becomes eligible to obtain other coverage, just as with regular COBRA benefits. Also, ARPA COBRA does not extend the total number of weeks that a recipient may be eligible to receive COBRA coverage.

Group health plans are required to issue notices regardless of the availability of the subsidy, a notice of the extended election period for COBRA coverage, and a notice of the expiration of the subsidy. The U.S. Department of Labor will issue model notices that plan administrators may use

For more information, contact Kristina Curry at 513.223.1130 or

AUTHOR: Kristina Curry

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