On Thursday, March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law after the bill was passed by the 117th Congress of the United States. The ARPA promises $1.9 trillion in federal spending for COVID-19 relief, including significant changes to employer-provided benefit plans.  Below is an overview of these changes to COBRA, dependent care assistance, and retirement plans that employee benefit advisors, plan advisors and plan sponsors need to know.

Subsidized COBRA coverage

The pandemic has forced many companies to close their doors and reduce the size of their workforce, which naturally has led many individuals to lose their health care coverage. Following a job loss or a reduction in hours, employees are generally permitted to continue their health care coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), provided that they pay the entire costs of their premiums. Realizing such high costs may deter employees from electing COBRA coverage, Congress has provided for a 100% COBRA subsidy under the ARPA. The subsidy runs from April 1, 2021 through September 30, 2021, and applies to "assistance eligible individuals."  Under the ARPA, an "assistance eligible individual" is a COBRA qualified employee who is eligible for COBRA coverage due to a reduction in hours or an involuntary termination of employment. For specific individuals who are not currently enrolled in COBRA, but were terminated from their job involuntarily or incurred a reduction in hours, they, too, are permitted receive this COBRA subsidy upon making a special election to enroll in COBRA.