On March 12, 2021, President Biden signed the American Rescue Plan Act (ARPA) into law, aiming to provide relief to individuals and businesses suffering from the COVID-19 pandemic. ARPA impacts employer-sponsored health plans in several ways, including the implementation of a COBRA premium subsidy. Employers should be aware of the actions they must take in response to this change.
COBRA requires an employer-sponsored group health plan to give employees who otherwise would lose coverage due to termination (or another qualifying event) a chance to continue to buy coverage for themselves and any family members on the plan for a limited period after that event. The maximum coverage period generally is 18 months. The plan typically may charge up to 102 percent of the cost of coverage for similarly situated active participants (the COBRA premium).