As part of the American Rescue Plan Act (ARPA), some employees may be eligible to receive a 100% subsidy on COBRA payments.
The subsidy applies to Assistance Eligible Individuals (AEIs), and their covered relatives. AEIs are individuals who were involuntarily laid off, or whose hours were cut below the benefits threshold as far back as November 2019. Individuals who voluntarily elected to end employment or who are terminated for cause are not eligible.
AEIs can receive 100% coverage of their COBRA payments from April 1 through September 1, 2021. Employers must cover these costs upfront but can claim a payroll tax credit against their quarterly taxes as a reimbursement from the federal government. Additionally, starting May 30, employers will have a duty to inform AEIs about their eligibility for COBRA subsidies and, for those AEIs who elected not to join a plan before the COBRA triggering event, a special 60-day enrollment period for qualified beneficiaries that begins on their date of termination.
If you have questions about your employee benefit plan, contact us for a free 30-minute consultation with an employment lawyer.
