On March 11, 2021, President Biden signed into law the American
Rescue Plan Act (ARPA). The law contains various provisions that
impact employers, including a new COBRA subsidy.
The ARPA COBRA Subsidy
For a limited period, the ARPA requires
employers to cover 100% of the employee's cost of continuing
group health coverage under COBRA for up to six months if an
employee has lost coverage under their employer's health care
plan due to a reduction in hours or involuntary termination (for
reasons other than gross misconduct) and elects COBRA continuation.
The subsidy does not apply to employees who voluntary terminate
employment. Those eligible to receive the COBRA subsidy include
eligible employees and covered dependents who (i) are either
already enrolled in COBRA, (ii) did not elect COBRA when it
initially became available to them, or (iii) elected COBRA
initially but let the coverage lapse.
