March 31, 2021

Michael J. Davey, Esquire

Employment Law Department

Eckell Sparks Law Firm

[email protected]


As I previously reported, on March 11, 2021, President Biden signed the American Rescue Plan into law. Among its many provisions, the law made some temporary—but profound—changes to the federal COBRA law.

Essentially, the new law provides new health insurance COBRA-eligibility for a specific class of individuals.  Starting tomorrow, April 1, 2021, and continuing through September 30, 2021 the American Rescue Plan requires employers to cover 100% of certain former-employee’s COBRA premiums. Employees who: (1) lost coverage under a former employer’s health plan because of an involuntary termination; (2) did not voluntarily resign; (3) were not fired for gross misconduct; and (4) who are not eligible for health insurance under another group health plan or Medicare, are potentially eligible for up to six-months of fully-subsided (i.e., fully paid by the former employer) COBRA health care coverage.

Employees who meet those qualifications can receive the benefits of this new law if they: (1) are already enrolled in COBRA; (2) had previously elected COBRA coverage that would have extended past April 1, 2021, but let it lapse; or (3) did not elect COBRA when it initially became available, but had they done so, their COBRA benefits would have extended beyond April 1, 2021.

The new law does not extend the COBRA eligibility period. In other words, an eligible employee’s entitlement to COBRA is still capped at 18 months. But if any employee who checks all the boxes above has (or would have had) any part of his/her 18-month duration extend past April 1, 2021, then they can take advantage of the new law. (Put another way, only eligible employees who elected or could have elected COBRA benefits after November 1, 2019 can receive free coverage). Similarly, if an employee’s COBRA coverage is set to expire before September 30, 2021, the American Rescue Plan does not extend it.

The new law places the burden of notification and enrollment for eligible employees on employers. That means eligible employees who are covered by (or could have been covered by) COBRA after April 1, 2021 don’t have to do anything. For those eligible employees who let their COBRA coverage lapse, the law creates a new special enrollment period from April 1, 2021. Again, it is up to employers to ensure they comply with all mandated notice requirements.

If you believe you may be entitled to coverage, or you are an employer that has questions about this new COBRA law, contact our offices today for a free consultation.