COBRA Subsidy What Employers Need to Know
A six-month COBRA subsidy period was signed into law on March 11, 2021 as part of the American Rescue Plan Act of 2021 (ARP). It includes a 100% COBRA subsidy for all eligible employees and their covered dependents effective April 1 through September 30, 2021.
All Employers with a group health plan will be required to pay 100% of COBRA or State Continuation healthcare premiums for qualified individuals for this period as long as they remain eligible. Employers will be reimbursed by the government through Medical FICA payroll tax credits. (Please review the tax consequences with your accountant.)
Who is considered eligible for COBRA Subsidy coverage?
- All individuals and their enrolled dependents affected by an involuntary discharge or reduction in work hours (does not include voluntary termination or termination due to gross misconduct), who are eligible for COBRA or state continuation healthcare coverage and who have elected continuation of coverage during the covered period.
- All individuals and their enrolled dependents affected by an involuntary discharge or reduction in work hours prior to April 1, 2021 but did not elect COBRA/state continuation or who dropped COBRA/state continuation coverage because they were unable to continue paying the premiums.