Government Passes The American Rescue Plan Act

Find out how new legislation under the ARPA will affect employee benefits.

COBRA Coverage Subsidies

 Legislation under The American Rescue Plan Act of 2021 (ARPA) states that employees who lost employer sponsored group health coverage due to involuntary termination or reduction in hours are eligible receive COBRA coverage with a 100% premium subsidy from April 1, 2021 through September 30, 2021.

The Subsidy Period does not extend the typical 18 months of COBRA coverage an individual is entitled to but does 100% subsidize the six-month time frame. Meaning, terminated or hour reduced individuals who’s 18-month COBRA eligibility window falls into the April 1 – September 30 timeline are eligible for the 100% subsidy exclusively during those six months. This gives terminated or hour reduced employees a second chance to enroll if they waived COBRA coverage in the past and current individuals drawing COBRA access to the subsidies. Any individual whose still COBRA eligible after September 30, 2021 will be subject to the full COBRA premium if they wish to continue coverage.

By May 31, 2021, employers are required to notify all individuals who were COBRA eligible before April 1, 2021 that they are entitled to the subsidies under the ARPA. COBRA coverage for these individuals would become retroactive to April 1, 2021 if they choose to elect. Normal COBRA paperwork should be used for individuals who become COBRA eligible during the Subsidy Period. The government will be providing new COBRA paperwork reflecting the ARPA revisions within the next 45 days.

Terminated employees who are currently eligible or become eligible during the Subsidy Period for another group’s health plan automatically becomes ineligible for the COBRA premium subsidy under the ARPA.

Tax Credit Extension of FFCRA

The APRA extends The Families First Coronavirus Response Act’s (FFCRA) requirement for employers with up to 500 workers to provide 2 weeks of paid sick leave and up to 12 weeks of paid family and medical leave for employees affected by various circumstances caused by Covid-19. The new extension period lasts through September 30, 2021.

Companies employing fewer than 50 employees are not required to offer the leave but will be provided with tax credits if they choose to do so.

The APRA also includes new provisions for paid sick leave including time to receive the COVID 19 vaccine and or recover from side effects relating to inoculation. The new leave provisions also include paid leave for time awaiting a COVID-19 diagnosis after exposure or if an employer requires testing.