On March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA) into law. ARPA includes a provision that provides certain individuals (called “Assistance Eligible Individuals” or “AEIs”) with a 100% subsidy for COBRA continuation coverage for up to six months.
Under the ARPA, the employer, the plan (in the case of a multi-employer plan), or the insurer (for fully-insured coverage subject to mini-COBRA laws), has an obligation to provide subsidized COBRA coverage and pay or incur the AEI’s COBRA premium cost during the “subsidy period” (i.e., April 1, 2021 to September 30, 2021). AEIs, in contrast, pay nothing during the subsidy period.
Tax credits are available for COBRA coverage provided by Taft-Hartley multiemployer plans. However, the logistics for claiming the credit will be determined by subsequent regulations issued by the DOL.
Many details that need to be worked out in regulatory guidance. However, the ARPA’s COBRA subsidies are similar to the COBRA premium assistance that was created as part of the 2009 American Recovery and Reinvestment Act (ARRA). Thus, reviewing the 2009 rules may be helpful as you wait for additional guidance from regulatory authorities.
For more information, read the full summary.
On April 7, 2021, the Department of Labor released the following guidance. However, the IRS has yet to release its guidance. SMACNA will continue to monitor this issue and provide additional guidance as it becomes available.