• Davis and Gras, LLC

Lost your job in the last 18 months? You can now remain on your employer's insurance plan for free.

Americans who lost a job in the last 18 months are able to stay on or join their former employer’s healthcare plan for free through September 30, 2021.

The American Rescue Plan Act, was signed by President Joe Biden on March 11, 2021. It included a COBRA subsidy covering 100% of COBRA premiums for “Assistance Eligible Individuals” during the period of April 1, 2021 through September 30, 2021.

If you work at a company with more than 20 employees and lose your job, you can remain on your employer-sponsored health insurance plan for 18 months through COBRA. Thanks to the American Rescue Plan, COBRA is now free through September 31, 2021.

Normally, COBRA can be significantly more expensive than employer-sponsored insurance because instead of your employer covering some of the premium, you are on the hook for coverage. Because of these increased costs, many former employees forgo continuing their health insurance coverage through COBRA.

However, thanks to the American Rescue Plan Act, the government is subsidizing the entire cost of COBRA premiums for former employees, thus making COBRA coverage free through the end of September!

Who qualifies?

Anyone is eligible who has involuntarily lost their job or health insurance or had their hours reduced within the last 18 months. According to the U.S. Department of Labor, qualifying criteria for COBRA include any of the following:

  • voluntary or involuntary job loss;

  • reduction in the hours worked;

  • transition between jobs;

  • death;

  • divorce; and

  • other life events.

Under the relief bill, a "reduction in hours" covers the business’s change in hours of operations, a shift from full-time to part-time status, if you take a temporary leave of absence or if you participated in a lawful labor strike.

Who is covered?

All those normally insurable under COBRA, meaning you and the family members who were already on your health plan.

Who doesn’t qualify?

The American Rescue Plan Act does not cover all former employees. The following individuals are not eligible to enroll subsidized COBRA:

  • anyone who voluntarily left their job;

  • anyone who chose to reduce their work hours;

  • anyone who was fired for gross misconduct; or

  • anyone who already has health insurance, whether through the government or your employer.

Also, beneficiaries who recently turned 26 (the cutoff age for dependents to stay on their parents’ health insurance) and former spouses who lost their coverage due to a divorce will be unable to receive free COBRA benefits.

How to enroll

Pursuant to American Rescue Plan Act, employers are required to notify eligible individuals about potential eligibility and details of the subsidy by May 31, 2021. Individuals then have 60-days to elect. If your employer or the employment-based group health plan you were a part of do not notify you, the Labor Department recommends contacting your employer to request information on your eligibility.

If your employer waits until the May 31, 2021 deadline to notify you, you could miss out on two months of free coverage. July 30, 2021 is the last day to enroll.

For those already enrolled in a COBRA plan, subsidized premiums were set to begin on April 1, 2021 and end September 30, 2021. The provision does not extend your policy’s life beyond the normal 18 months, though.

Additional information about subsidized COBRA

Although the subsidy covers the health plan’s premium, you will still be responsible for copays and deductibles.

If you sign up for subsidized COBRA, you can keep it past September 30, 2021, but you will have to pay the premiums after that date.

If you were insured through COBRA before April 1, 2021, medical and premium costs incurred before then are not refundable.

If at any point between April 1, 2021 and September 30, 2021, you pay in full for COBRA but were eligible for free coverage, you may qualify for a refund or credit. You should contact the plan administrator or the employer sponsoring the plan.

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