COVID-19 Update American Rescue Plan Act – Extension of EPSL and EFMLA and New COBRA Subsidies

The American Rescue Plan Act (ARPA), which is the latest bill to address the ongoing economic impacts of COVID-19, has been signed into law. We’ve outlined the key provisions of this new legislation that directly affect employers and employees – the optional extension of sick and family leave and establishment of COBRA subsidies.

Click here for a complete overview of these new provisions and how they affect employers and employees. 

Pertaining to the COBRA premium subsidy it is important to note:

  • ARPA provides a 100% COBRA subsidy if the employee’s work reduction or termination was involuntary. The subsidy applies for up to six months of coverage from April 2021 through September 2021 (unless the individual’s maximum COBRA period expires earlier).
  • For group plans subject to the federal COBRA rules, the employer will be required to pay the COBRA premium but then will be reimbursed through a refundable payroll tax credit.
  • Employers with fewer than 20 workers usually are exempt from the federal COBRA rules, but their group medical insurance plans may be subject to a state’s mini-COBRA law. In that case, it appears the subsidy will be administered by the carrier. The carrier will pay the premium and then be reimbursed by the government.
    Note: the premium subsidy will apply to NY continuation.
  • Although it takes effect April 1, 2021, employees who were terminated earlier but are still in their COBRA election window also are included.
  • Federal guidance is expected to be released by April 10, including model notices that
    plans can tailor for their use.

As this legislation is very new, and vague in certain areas, we will keep you updated as more information and additional clarification becomes available.