Under the new stimulus law, employers must make available temporary COBRA premium subsidies and special COBRA enrollment rights to eligible individuals. Employers are entitled to a refundable payroll tax credit for the amount of the subsidies.

The American Rescue Plan Act of 2021 (ARPA), which was signed into law on March 11, 2021, creates a 100% COBRA premium subsidy and special COBRA enrollment rights for certain individuals who lost or lose group health plan coverage due to an involuntary termination of employment or reduction in hours. The COBRA premium subsidy will be available for up to six months, from April 1, 2021 to September 30, 2021. Employers that provide the COBRA premium subsidy are entitled to a refundable tax credit for the amount of the subsidy. To comply, employers must determine who is eligible for the subsidy and the special enrollment rights and work with their COBRA administrators to distribute new required notices.