Regulatory Resources

American Rescue Plan Act COBRA Subsidy FAQs

The American Rescue Plan Act requires that from April 1, 2021 through September 30, 2021, certain COBRA qualified beneficiaries who are referred to as “assistance eligible individuals” who elect or will elect COBRA are not charged any amounts for COBRA coverage (premium assistance or subsidy). The employer, plan or insurer, as applicable, will be reimbursed for such amounts through a federal tax credit (against FICA taxes that fund Medicare hospital benefits). The statute also includes various notice requirements regarding the subsidy.

Below are some FAQs on this subsidy. You can read more details here.

  1. Does the subsidy only apply to health coverage, or does it also apply to dental and vision?
    The subsidy also applies to dental and vision coverage. 
  2. When will the COBRA Continuation Notice (“Notice”) and Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021 be mailed?
    Luminare Health will begin mailing the Notices on 5/1/21.
  3. How much time will an assistance eligible individual have to elect COBRA?
    60 days from the date the Notice is provided. The period of time in which to elect COBRA under the American Rescue Plan Act of 2021 is not eligible for an extension pursuant to the Notification of Relief issued by the Department of the Treasury and the IRS due to the National Emergency or the subsequent relief in EBSA Disaster Relief Notice 2021-01. 
  4. If a dependent’s coverage terminates because the dependent is no longer eligible (i.e. due to age), do they qualify for the subsidy?
    No, this is not an involuntary loss of employment or a reduction in hours.
  5. Is death of an employee considered an involuntary loss of employment, or a reduction in hours, for purposes of the COBRA subsidy? 
    Death is not considered an involuntary loss of employment, or reduction in hours and does not qualify a dependent for the COBRA subsidy.
  6. Is military leave considered an involuntary loss of employment, or a reduction in hours, for purposes of the COBRA subsidy?
    Military leave would be a reduction in hours that would trigger the COBRA subsidy
  7. If an individual who qualifies for the subsidy has already paid for their COBRA coverage, will Luminare Health work with the client to reimburse the individual?
    Yes, the COBRA team will determine whether a refund is due and if so, issue reimbursement to the individual/client.