By James E. Brophy, Patrick P. Degnan and Lidia Koelbel, Attorneys with Ryley Carlock & Applewhite On March 11, 2021, the American Rescue Plan Act of 2021 (the “ARPA”) was signed into law. Under Section 9501 of ARPA, employers will be required to provide a tax-free subsidy to certain employees and their qualified beneficiaries equal to 100% of their COBRA continuation premium. Generally, COBRA premiums are paid by the employee following an event that causes the employee to lose his or her health care coverage (i.e. involuntary termination or a reduction in hours). Under ARPA, Assistance Eligible Individuals (“AEIs”) are eligible to receive the COBRA subsidy. An individual is an AEI if: He or she is involuntarily terminated for any reason other than gross misconduct; or He or she involuntarily experiences an hours reduction; or He or she voluntarily reduces hours as a result of COVID-19 safety concerns (there may be some ambiguity as to whether an individual meets this standard). The subsidy is available to anyone meeting either of the following requirements: Any eligible individual who is enrolled in COBRA (or will enroll in COBRA) for coverage from April 1, 2021 to September 30, 2021 (the “Subsidy Period”); and Any former employee (who is otherwise an eligible individual) who did not elect COBRA coverage or dropped COBRA coverage prior to April 1, but would otherwise be within the employee’s 18-month COBRA coverage during the Subsidy Period. The maximum COBRA subsidy under ARPA is equal to 100% of the plan’s premium for the 6-month Subsidy Period. The subsidy can end earlier if: The individual’s original COBRA maximum period of coverage is exhausted, or <li
