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CORONAVIRUS PANDEMIC: The American Rescue Plan Act Provides COBRA SUBSIDY

CORONAVIRUS PANDEMIC: The American Rescue Plan Act Provides COBRA SUBSIDY

The American Rescue Plan Act (the “Act”) signed into law by President Biden on March 11, 2021, authorizes federal spending for much-needed economic relief and poverty alleviation. The most discussed provision of the Act may be the $1,400 stimulus payments to most Americans.

However, the Act provides significant help to COBRA recipients who have been involuntarily terminated (other than for gross misconduct). The law provides a 100% subsidy to employers to offer free COBRA coverage to eligible recipients.

Specifically, the Act provides free COBRA coverage to certain individuals for the period from April 1, 2021, through September 30, 2021. The law also requires employers to extend offers of COBRA coverage to other individuals whose right to COBRA coverage previously ended. The offer also includes qualified beneficiaries who are enrolled for COBRA coverage as of April 1, 2021, resulting from of a covered employee's involuntary job loss.

Employers are required to issue revised COBRA notices to all individuals that may be eligible for the subsidy. This includes workers and their beneficiaries.

But equally important are other key provisions of the Act that directly impact workers. They include:

  • An extension of the tax credits for employers voluntarily providing paid sick and family leave under the Families First Coronavirus Response Act (“FFCRA”) until September 30, 2021.
  • Expansion of additional qualifying reasons for workers applying the paid sick and family leave under the FFCRA. These additional qualifying reasons are:
  1. workers getting COVID-19 immunization;
  2. workes recovering from complications due to COVID-19 immunization; and
  3. workers awaiting the results of a COVID-19 diagnosis or test.
  • A voluntary additional 80 hours/10 days of paid sick leave and an additional 10 weeks of paid sick and family leave under FFCRA beginning April 1, 2021.

Also, millions of workers who were set to lose unemployment benefits in a matter of days now will receive continued, enhanced federal payments of an extra $300 each week until September 6, 2021. Many workers who collect unemployment also are set to receive a tax break on those benefits.

The attorneys at Lebau & Neuworth are highly experienced in COBRA-related issues. If you need any advice, assistance and representation relating to the provisions of the Act or any employment or employee-benefits matter, including COBRA, contact us at 888-456-2529 or lebauneuworth.com/contact-us.

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