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COBRA Benefit Included in American Relief Plan

On March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA) which includes, among its many provisions, a COBRA premium assistance benefit. This provision treats an individual eligible for COBRA assistance, for purposes of any COBRA continuation provision, as having paid in full the COBRA premiums for the period April 1, 2021 through September 30, 2021 (the Premium Assistance Period). This relief will be available for anyone who (1) becomes COBRA eligible during the Premium Assistance Period, (2) is currently enrolled in COBRA, or (3) is within their COBRA continuation period (generally 18 months) but did not elect or previously dropped COBRA coverage. Any person who qualifies for assistance and is currently enrolled in COBRA – or did not elect COBRA but is within their COBRA continuation period – must elect COBRA coverage within 60 days of receiving notice of the extended election period from their former employer.

Employers must provide the typical COBRA election notice to individuals who become entitled to elect COBRA during the Premium Assistance Period. Employers must also include notice of the premium assistance available and, if applicable, the option to enroll in different coverage. Regarding individuals entitled to an extended election period, employers must provide notice, by May 31, 2021, of the 60-day period to elect COBRA. Employers must also notify eligible individuals when the premium assistance is expiring. This notice must be provided during a period of no more than 45 days from expiration and no fewer than 15 days from expiration. The ARPA directs the Department of Labor to issue model notices required under the Act.

Employers (under self-funded plans) and insurers (under fully insured plans) who provide COBRA continuation coverage to assistance eligible individuals under this program will be reimbursed for the premiums not paid by such individuals by a tax credit equal to the unpaid premiums.