Employer Alert: COBRA Premium Assistance  through September 2021

May 10, 2021

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (“ARPA”). Under the ARPA, employers must pay 100 percent of insurance premiums for individuals eligible for Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) coverage between April 1 and September 30, 2021.  The Act also applies to employers covered under state “mini-COBRA” laws, as well as state and local governments subject to health care insurance continuation provisions under the Public Health Service Act.

Individuals are eligible for payment of their premium during the subsidy period for either of two qualifying events: involuntary termination of employment or a reduction of working hours that causes a loss of coverage under the employer’s plan. 

During the COBRA subsidy period, employers may tax a dollar-for-dollar tax credit against the employer’s federal Medicare contribution obligations. 

More information regarding COBRA assistance under ARPA is available in the FAQs that the Department of Labor published on April 7, 2021. The Internal Revenue Service is expected to issue regulations and/or guidance regarding the subsidy as well.

To ensure compliance with new COBRA requirements, please contact Margaret H. Paget or Allyson E. Kurker at Kurker Paget LLC.