COBRA Subsidy Provision of the ARPA


The American Rescue Plan Act (ARPA), signed into law March 11, 2021, provides a 100% subsidy of premiums for employer-sponsored group health insurance continued under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) and similar state continuation of coverage (mini-COBRA) programs.

ARPA subsidies cover the full cost of COBRA or mini-COBRA premiums from April 1, 2021, through Sept. 30, 2021, for employees (and their qualifying family members), if the employee lost or loses group health insurance due to an involuntary job loss or reduction in work hours.

The ARPA COBRA subsidy is funded through a tax credit to employers whose plans are subject to COBRA or are self-insured and to the insurer for other plans. The credit is taken against payroll taxes. It can be advanced and is fully refundable. The credits will be provided each quarter in an amount equal to the premiums not paid by those individuals who are eligible for assistance.

Take a free copy of our brief on how the ARPA affects COBRA subsidies.

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For an analysis of how “voluntary” and “involuntary” employment termination are defined as it relates to whether individuals are eligible for the 100% COBRA subsidy, navigate here.


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