The American Rescue Plan (ARP) signed into law by President Joe Biden provides plenty of benefits for those eligible including:
a) $242 billion in relief payments such as Economic Impact Payment of up to $1,400 for individuals or $2,800 for married couples, plus $1,400 for each dependent;
b) expansion of the Child Tax Credit from $2,000 to $3,600 for children under age 6, and $3,000 for other children under age 18;
c) $350 billion dollars in emergency funding for state, local, territorial, and Tribal governments;
d) $10 billion for states, territories, and Tribes to cover the costs of capital projects like broadband infrastructure;
e) $10 billion for states, territories, and Tribes to assist vulnerable homeowners to make mortgage payments and other obligations;
f) $21.6 billion for states, territories, and local governments to assist households that are unable to pay rent and utilities due to the COVID-19 crisis;
g) $10 billion to state and Tribal governments to fund small business credit expansion initiatives;
h) tax credit benefits to small businesses to help maintain payrolls; and
i) extended unemployment insurance benefits and a waiver of federal income taxes on the first $10,200 of unemployment benefits received in 2020 by middle- and lower-income taxpayers.
While the above benefits will most assuredly provide relief to many Americans devastated by the economic fall out from the COVID-19 pandemic, this article will focus on that part of the ARP which provides a six-month 100% COBRA subsidy for eligible employees separated from employment covering the period of April 1, 2021 through and including September 30, 2021.
First a quick explanation of what COBRA is. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Although COBRA coverage might be less expensive than an individual health insurance plan would be, qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost of the plan. Employers with 20 or more full-time-equivalent employees are usually mandated to offer COBRA coverage.
Under the COBRA subsidy provision of the ARP the federal government will pay 100% of COBRA insurance premiums for eligible employees who lost their jobs and for their covered relatives through the end of September allowing them to stay on their company-sponsored health plan. According to Kathryn Bakich, Washington, D.C.-based national health compliance practice leader at Segal, an HR and employee benefits consultancy, employers will obtain the subsidy through a payroll tax credit against employers’ quarterly taxes and will be responsible for paying health insurance carriers for the premiums.
Both fully insured and self-insured group health plans subject to federal COBRA are eligible for the credit against their Medicare FICA payroll taxes and must provide the COBRA premium subsidy to assistance eligible individuals who have elected COBRA coverage, starting April 1.
Only assistance eligible individuals (AEIs) qualify for a subsidy excluding employees who voluntarily end employment. An AEI is a worker who during the time period of April 1, 2021 through and including September 30, 2021 is eligible for COBRA insurance coverage due to an involuntary separation from employment, other than for gross misconduct, or a reduction in hours, and who elects COBRA coverage. As with COBRA eligibility in general, an AEI will lose eligibility for COBRA subsidized coverage if they become eligible for other group health insurance coverage or Medicare. AEIs are required to notify the plan if they lose eligibility for COBRA subsidized coverage.
If you are a worker who believes you are the victim of a discriminatory or retaliatory hostile work environment or firing, call the attorneys at Mashel Law (732) 536-6161 or fill out the contact form on this page for immediate help. At Mashel Law, we are dedicated to protecting the rights of New Jersey workers.