COBRA Subsidy What Employers Need to Know

Apr 22, 2021 | Benefits, COBRA, DOL, Healthcare

Photo by Kristine Wook on Unsplash

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.

Employer notice requirements for COBRA subsidy.

  • A notice to qualified individuals and their dependents must be provided to those affected between April 1 and September 1, 2021. The notice can be included with the COBRA election/State Continuation documentation or as a separate notification.
  • Employers are also required to notify qualified individuals and dependents who had a qualifying event prior to April 1, 2021 and have not already exhausted their maximum continuation coverage period (usually 18 months). These individuals must be notified no later than May 31, 2021 (60 days following April 1, 2021).
  • Notice is also required to qualified individuals when the COBRA subsidy is ending. The notice must include the end date, September 30th, or the end of their maximum continuation coverage period if it ends sooner, and options for continuation of healthcare coverage after September 30th.

(Please contact your benefits coordinator or healthcare provider for further information regarding required notices.)  Click here for DOL model notices:

Written by: Kerry Rieder-McLaughlin
Human Resources Consultant
Law Offices of McLaughlin & Associates, P.C.

April 22, 2021

NOTE: This publication should not be regarded as legal advice or legal opinion. The content is intended for general informational purposes only. If you have any concerns regarding anything in this publication you may contact your own attorney, CPA, or our law office at 630-230-8434, website