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COBRA’s Subsidy Proposal and What it Means for You

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President Biden released his proposal for the next COVID-19 relief bill. This comes as a great relief for employees but leaves many questions unanswered for their employers.

The proposal includes a subsidy for 85% of the COBRA premium and the Qualified Beneficiary would pay the remaining 15%. Employers can recoup the 85% in the form of a payroll tax credit.

A special enrollment period would be provided to those people still within their 18 month COBRA eligibility period who did not originally elect COBRA, or elected and then dropped their COBRA coverage. It applies only to those employees who lost their employer-sponsored coverage due to to reduction of hours and involuntary termination of employment.

A gap of coverage would not be permitted and the employee would be responsible for back payments to the original qualifying event date in order to take advantage of the subsidized premiums.

If passed, the proposal will be effective the first day of the month after its passing through September 30th, 2021.

At this point, we are unaware if this subsidy applies to just medical or all COBRA coverages. This is a proposed bill with a great opportunity for changes to be made before passing and being put into effect. We will keep this post updated as the bill develops and evolves.

If you have questions about how this will impact your health plan, please contact your BCC contact to talk through any updates.