The recently enacted American Rescue Plan Act of 2021 provides eligible workers with a subsidy to pay for health care (e.g., medical, dental, and vision, but not health FSA coverage) continuation coverage for themselves and their covered children and spouses following a loss of coverage.  The subsidy applies to both continuation coverage provided under federal COBRA as well as under state “mini-COBRA” laws.

The structure of this COBRA subsidy is similar to the COBRA subsidy that Congress enacted in 2009 in connection with the financial crisis, but contains some nuances and several unanswered questions that the Department of Labor and the IRS will have to address.

The Act provides that an “assistance eligible individual” is entitled to receive a subsidy equal to the full monthly cost for continuation coverage from April 1, 2021, through September 30, 2021 (the “subsidy period”).

 

Read the legal alert