The American Rescue Plan Act of 2021 (ARPA), was signed by the President on Thursday, March 11, 2021 and included premium assistance for COBRA coverage up to a six-month period. The premium assistance appears to apply to certain individuals and their families due to an involuntary termination of employment or reduction of hours.
Any employee who lost coverage as of April 2020 (when the pandemic began impacting employment) is potentially eligible for the entire six-month subsidy, since their 18-month COBRA period would include the period from April 1 through September 30, 2021 when the subsidy ends. Even employees who lost health coverage as far back as November 2019 may benefit from the subsidy, since their 18-month maximum COBRA period will not expire until the end of April 2021. However, individuals who are eligible for other group health coverage or Medicare are not eligible for the subsidy.
The U.S. Department of Labor is required to issue model COBRA notices addressing the subsidy, and we expect the government agencies to issue guidance on various issues related to the subsidy in the coming weeks. Expected by May 10, 2021.
At AJM Associates we are currently reviewing the guidelines and next steps to determine how this impacts both our clients and their employees, including how payment will be made by the government to pay for the COBRA or if the premium will be offset by the employer by claiming a credit against Medicare payroll taxes.
Stay posted.