ARPA COBRA Subsidy Provisions

The American Rescue Plan Act (ARPA), signed into law March 11, 2021, provides a 100% subsidy of applicable COBRA premiums for eligible beneficiaries and their dependents, for the time period beginning April 1, 2021 and ending no later than September 30, 2021.

Who is Eligible?

An Assistance Eligible Individual (AEI) is an employee who lost or loses coverage due to an involuntary termination or a reduction in hours. Eligibility also is extended to their dependents who lost coverage and elect COBRA. The subsidy applies to those who are still within their original COBRA coverage period, for the length of that coverage period, even if they declined or dropped COBRA coverage earlier.

How Long Does the Subsidy Last?

The duration of the subsidy is no more than six months, beginning on April 1, 2021 and continuing through the earlier of:

  • September 30, 2021
  • AEIs COBRA end date as determined by the original qualifying event date
  • AEI qualifies for other coverage (penalties may apply for failure to disclose other coverage)

How is the Subsidy Funded?

The subsidies are funded through a payroll tax credit. Employers are required to provide new notices about the subsidy to employees. The U.S. Department of Labor (DOL) will issue model notices for this purpose.

Next Steps

Employers should familiarize themselves with the provisions of the ARPA and watch for agency guidance on its implementation. It is important to note that this regulation is evolving and included information is subject to change. Trust Creative Benefits, Inc. to share additional information regarding the impact of the ARPA as additional guidance and pertinent updates are released. In the meantime, please click here to learn more.


Should you have any questions, please don’t hesitate to contact Creative Benefits, Inc. at 866-306-0200 or solutions@creativebenefitsinc.com.