How COBRA and Health Insurance Subsidies Work Under the American Rescue Plan Act

These two significant provisions in ARPA can help more Americans obtain and pay for health insurance coverage.

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A Quick Overview

As you may know, on March 11, 2021, President Joseph Biden signed into law the American Rescue Plan Act (ARPA). ARPA is the third stimulus package signed into law in response to the COVID-19 pandemic.

Under ARPA, two significant provisions were included that will help more Americans obtain and pay for health insurance coverage:

  1. COBRA Subsidies—ARPA provides a six-month subsidy for certain individuals who are eligible for health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

  2. Health Insurance Marketplace Subsidies—ARPA temporarily increases the amount of subsidies that can be obtained for coverage purchased on the Health Insurance Marketplace (Marketplace), and it increases the number of people who can qualify for a subsidy.

Let's talk about some of the highlights of these two new provisions.

COBRA Subsidies

  • ARPA provides federal funding to cover 100% of COBRA premiums for periods of coverage between April 1, 2021 and September 30, 2021.

  • The subsidies are only available to individuals and their family members who became eligible for COBRA coverage because of an involuntary termination of employment or a reduction in hours.

  • A second 60-day election period must be offered to certain individuals who did not elect COBRA coverage during their initial election period or who terminated their COBRA coverage prior to the maximum duration permitted under the law. The individuals who must be offered a second election period are those who would be eligible for one or more months of subsidized coverage had they originally elected COBRA coverage and/or continued making COBRA premium payments.

Health Insurance Marketplace Subsidies

  • ARPA makes temporary changes to subsidy payments and eligibility for 2021 and 2022.

  • During this time period, ARPA removes the requirement that household income must be within 400% of the Federal Poverty Level (FPL) to qualify for a subsidy.

  • ARPA changes the maximum premium payment that an individual or family would have to pay for the benchmark plan (i.e., the second-lowest cost silver plan) to 8.5% (from 9.83%) of their household income.

  • ARPA increases the amount of subsidy payable to an individual or family based on their household income.

Ensure Your Coverage

These changes will hopefully result in more individuals receiving coverage through COBRA and the Marketplace.

If you don’t currently get health insurance through your job, family, or another source, you might need to buy your own plan.

Ready to enroll in a health plan? Contact us at (855) 563-6993, and we'll help you get started.

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