American Rescue Plan Act Provides 100% COBRA Subsidies for COVID-19-Affected Employees

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American Rescue Plan Act Provides 100% COBRA Subsidies for COVID-19-Affected Employees

The American Rescue Plan Act of 2021 (ARPA) included a provision to help unemployed workers by authorizing a 100% subsidy of COBRA health insurance premiums through September 30, 2021.

Under the ARPA, employers would receive the subsidy through a payroll tax credit against their quarterly taxes. Employees who lost their jobs due to the pandemic and their covered relatives would be allowed to remain on their employer-sponsored health plans for a six-month period beginning April 1, 2021, through September 30, 2021. The subsidy is not available to employees who voluntarily quit their jobs.

Determination of Eligible Workers

The ARPA’s COBRA subsidy is available to Assistance Eligible Individuals (AEIs) who lost their jobs or were placed on part-time work status since November 1, 2019. An AEI is a COBRA qualified beneficiary who meets the following requirements during the period from April 1, 2021, through September 30, 2021:

  • Is eligible for COBRA continuation coverage by reason of a qualifying event that is a reduction in hours (such as reduced hours due to change in a business’s hours of operations, a change from full-time to part-time status, taking of temporary leave of absence, or an individual’s participation in a lawful labor strike, as long as the individual remains an employee at the time that hours are reduced) or an involuntary termination of employment (not including voluntary termination); and
  • Elects COBRA continuation coverage.

Workers who reduced their hours or left their jobs voluntarily, or who qualify for Medicare or another group health plan, are not eligible.

Subsidy Period

The ARPA COBRA subsidy period can last from April 1, 2021, through September 30, 2021. However, it will end earlier if an AEI:

  • Becomes eligible for another group health plan, such as a plan sponsored by a new employer or a spouse’s employer (not including excepted benefits, a qualified small employer health reimbursement arrangement, or a health FSA), or becomes eligible for Medicare, or
  • Reaches the end of the maximum COBRA continuation coverage period.

Administrative Fees

AEIs will not need to pay any part of what they would otherwise pay for their COBRA continuation coverage, including any administration fee that would otherwise be charged.


Individuals who have already paid a COBRA premium for April 2021 or any month during the subsidy period should discuss a credit against future premium payments or a refund with the employer or plan administrator.

The Department of Labor has provided a document — General COBRA FAQs for Workers — that further clarifies the COBRA subsidy.

The attorneys at Armstrong & Vaught, P.L.C., are committed to helping workers in Oklahoma protect their workplace rights. Let us hold your employer accountable for violating your rights. Call us now at 918-582-2500, toll-free at (800) 722-8880, or contact us online for a free consultation with a skilled attorney.


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