Health and Group Benefits Update: The American Rescue Plan Act of 2021 – Federal COBRA Subsidy

This update provides information regarding the federal COBRA subsidy and its potential effects on plan sponsors and participants. The American Rescue Plan Act of 2021 (ARPA), signed into law on March 11, 2021, is a $1.9 trillion stimulus package meant to provide economic aid in response to the global coronavirus pandemic. The update discusses how deferral of COBRA coverage may result in large claims being submitted for reimbursement long after they are incurred, and plan sponsors may see an increased number of participants electing COBRA coverage well after their initial COBRA qualifying event. The update also covers eligibility and general terms for the COBRA subsidy, information on the election period extension, and the notice requirements for plan sponsors and participants.