COBRA Subsidy Provisions of the American Rescue Plan Act

The American Rescue Plan Act (ARPA), signed into law March 11, 2021, provides a 100% subsidy of premiums for employer-sponsored group health insurance continued under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) and similar state continuation of coverage (mini-COBRA) programs.

ARPA subsidies cover the full cost of COBRA or mini-COBRA premiums from April 1, 2021, through Sept. 30, 2021, for employees (and their qualifying family members), if the employee lost or loses group health insurance due to an involuntary job loss or reduction in work hours. The subsidy applies to people who are still within their original COBRA or miniCOBRA coverage period, for the length of that coverage period, even if they declined or dropped COBRA or mini-COBRA coverage earlier.

The subsidy does not apply to:

  • Individuals whose job loss was voluntary or the result of gross misconduct; or
  • Individuals who are eligible for another group health plan or Medicare.

The subsidies are funded through a payroll tax credit. Employers are required to provide new notices about the subsidy to employees. The U.S. Department of Labor (DOL) will issue model notices for this purpose.


Eligible Individuals: The subsidy is generally available to people who elected COBRA, become eligible for COBRA, or declined or discontinued COBRA and are still within their original COBRA coverage period.
Funding: The subsidy is funded by a refundable, advanceable credit against payroll taxes taken by employers or carriers.
Option to Switch coverage: The ARPA allows covered individuals to switch to similarly priced health coverage, if the employer allows it.

Important Dates

April 1, 2021: ARPA 100% subsidy begins to cover COBRA premiums.
Sept. 30, 2021: ARPA subsidy provision for COBRA premiums expires.

Action Steps

Employers should familiarize themselves with the provisions of the ARPA and watch for agency guidance on its implementation.


COBRA requires group health plans to allow covered employees and their dependents to continue their group health plan coverage when it would be lost due to specific events, such as a termination of employment or reduction in working hours. Individuals are usually allowed to continue their COBRA coverage for 18 months, although some similar state mini-COBRA laws mandate a longer coverage period.

Under COBRA, group health plans may require those covered to pay 102% of the premium for their continuing health insurance, leading many eligible individuals to decline coverage. The ARPA subsidy covers the full cost of COBRA or miniCOBRA premiums from April 1 – Sept. 30, 2021, for “assistance-eligible individuals.”

Covered Plans

The COBRA subsidy in the ARPA applies to group health plans subject to federal COBRA or to a state mini-COBRA program. Plans subject to federal COBRA are plans maintained by employers with 20 or more employees on more than 50% of the business days in the previous calendar year. Small-employer plans, small governmental plans and church plans are not subject to federal COBRA, but may be subject to a state mini-COBRA law and therefore be covered by the ARPA’s COBRA subsidy provisions.

Health flexible spending arrangements under Section 125 cafeteria plans are not covered by the ARPA COBRA subsidy.

Eligible Individuals

Individuals are eligible for the COBRA subsidy if they:

  • Are a qualified beneficiary of the group health plan; and
  • Are eligible for COBRA or mini-COBRA continuation coverage because of the covered employee’s involuntary termination (unrelated to gross misconduct) or reduction in hours of employment.

The subsidy is not available for people who voluntarily left their job. It is also unavailable for people who are eligible for Medicare or another group health plan, not including:

X A plan covering only excepted benefits;
X A qualified small employer health reimbursement arrangement; or
X A flexible spending arrangement.

Furthermore, individuals receiving a COBRA subsidy who become eligible for a group health plan or Medicare must inform the health plan for which they are receiving the subsidy of that fact, or face a penalty. The premium subsidy is not counted as gross income.

Extended Election Period

The ARPA allows individuals to elect subsidized COBRA if they:

  • Become eligible for COBRA or mini-COBRA due to involuntary job termination (not caused by gross misconduct) or reduction in hours between April 1 and Sept. 30, 2021;
  • Previously declined COBRA or mini-COBRA after becoming eligible due to involuntary job termination (not caused by gross misconduct) or reduction in hours, but would still be within their COBRA or mini-COBRA coverage period had they elected the coverage at that point; or
  • Previously elected COBRA or mini-COBRA but discontinued the coverage before April 1, 2021.

The election period for subsidized COBRA under ARPA begins on April 1, 2021, and runs until 60 days after the date individuals receive notice from the health plan of the availability of the COBRA subsidy.

Duration of Coverage

COBRA and mini-COBRA coverage under the ARPA election extension starts with the first period of coverage beginning on or after April 1, 2021, and continues through the end of the individual’s COBRA or mini-COBRA coverage period. The individual’s COBRA or mini-COBRA coverage period is the period that would have applied had the individual elected the continuation coverage when first eligible following the initial qualifying event. For individuals who previously elected COBRA or mini-COBRA, discontinued it, and are now using the ARPA extended election period to obtain COBRA, the COBRA coverage period is calculated as if they had not dropped the coverage.

Switching Coverage

The ARPA contains a provision that—at the employer’s option—allows individuals eligible for the COBRA subsidy and enrolled in the employer’s group health plan to change to different health coverage also offered by the employer. The new coverage cannot have a higher premium than the individual’s previous coverage, and it must be offered to similarly situated active employees. The option does not apply to plans that provide only excepted benefits, to qualified small employer health reimbursement arrangements or to health flexible spending arrangements.

The change must be elected within 90 days of the employee receiving notice of the option.

Notice Requirements

The ARPA imposes new COBRA notice requirements on health plans.

General Notice

Plan administrators must provide notification of COBRA benefits under ARPA. The notice must be written in clear and understandable language, and it must inform recipients of the availability of ARPA premium assistance and the option under the ARPA to enroll in different coverage (if the employer permits the option).

The notice must be provided to individuals who become eligible for COBRA or mini-COBRA during the period of April 1 – Sept. 30, 2021. In addition, it must be provided by May 31, 2021, to people who have already elected COBRA coverage, and to people subject to the ARPA election extension—that is, people eligible for the subsidy who declined or discontinued COBRA or mini-COBRA before April 1, 2021.

The notification may be included in an amendment to a plan’s existing notices or be given in a separate notice, but it must contain the following information:

  1. The forms necessary for establishing eligibility for premium assistance
  2. The name, address and telephone number necessary to contact the plan administrator and any other person maintaining relevant information in connection with premium assistance
  3. A description of the extended election period under the ARPA
  4. A description of the obligation of qualified beneficiaries to notify the plan if they become eligible for another group health plan or Medicare, and the penalty for failure to do so
  5. A prominently displayed description of the right to a subsidized premium and any conditions on the entitlement to the subsidized premium
  6. A description of the option of the right to enroll in different coverage (if the employer permits this option)

The DOL is charged with issuing a model general notice by April 10, 2021, for plans to use to meet the general notice requirement.

Notice of Expiration of Subsidy

Plans must also provide individuals eligible for the ARPA subsidy with notice of its expiration. The notice must be written in clear and understandable language, and inform recipients that:

  • The premium assistance will expire soon, prominently identifying the expiration date; and
  • The individual may be eligible for coverage without premium assistance through COBRA continuation or a group health plan.

Plans are not required to issue an expiration notice to individuals whose subsidy is expiring because they became eligible for other group health plan coverage or Medicare.

The notice must be provided during the 45 – 15-day period before the individual’s subsidy expires. The DOL must issue model expiration notices by April 25, 2021.

Tax Credit

The ARPA COBRA subsidy is funded through a tax credit to employers whose plans are subject to federal COBRA or are self-insured, to the plan for multiemployer plans, and to the insurer for other plans. The credit is taken against payroll taxes. It can be advanced (according to forms and instructions to be provided by federal agencies) and is fully refundable. The credits will be provided each quarter in an amount equal to the premiums not paid by assistance-eligible individuals.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Reach out for more workplace guidance or to learn more about the power of voluntary benefits. Please contact us at any time at 305.238.1000.

American Rescue Plan Contains Employment-related Provisions

President Joe Biden signed the American Rescue Plan Act of 2021 (ARPA) into law on March 11, 2021. Along with providing financial relief for individuals, state and local governments, schools, businesses and for other purposes, the law contains the following measures of special interest to employers and their employees:

  • A subsidy for COBRA premiums, funded through employer tax credits
  • Extension of employer tax credits for FFCRA employee leave voluntarily provided through Sept. 30, 2021
  • Expansion of employee earnings eligible for the FFCRA tax credit
  • Inclusion of testing and immunization as reasons for FFCRA leave
  • Extension of $300 increase in weekly unemployment benefits
  • Extension of weekly unemployment benefits for workers who otherwise wouldn’t quality for these benefits
  • Expansion of subsidy for ACA premiums
  • Increase in DCAP contribution limits
  • Extension and expansion of the employee retention tax credit

Highlights of the ARPA

COBRA Subsidy: A 100% premium subsidy is provided.
FFCRA Leave: The employer tax credit is extended and voluntary FFCRA leave is expanded.
Unemployment: $300 weekly benefit increase extended.
ACA: Exchange insurance subsidies are increased.
DCAP: Dependent Care Assistance Program contribution limits are raised.

Important Dates

March 10, 2021: Congress passed the American Rescue Plan Act of 2021.
March 11, 2021: President Biden signed the bill into law.

Action Steps

Employers should review the ARPA’s provisions to identify any requirements and opportunities that apply to them. Employers are also advised to watch for official guidance on the implementation of the law.

COBRA Subsidy

The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) allows employees who would lose employer sponsored health insurance because of job loss (or a reduction in working hours) to continue that insurance for 18 months. However, the employer can require the employee electing COBRA coverage to pay the entire cost of the premium.

The ARPA provides a 100% subsidy of COBRA premiums from April 1, 2021, through Sept. 30, 2021, for employees and their family members who lost health insurance due to the involuntary termination (or reduction in hours) of their employment. These individuals would be allowed to elect subsidized COBRA even if they had earlier declined the COBRA option, or had enrolled in COBRA and then dropped it. The subsidy would not apply to employees who voluntarily terminated their employment or who qualify for another group health plan.

The subsidy is funded by the federal government through a refundable payroll tax credit. The ARPA contains new employee notice requirements for plan administrators; the U.S. Department of Labor will issue model notices for this purpose. Employees may elect subsidized COBRA any time from April 1, 2021, through 60 days after receiving notice of the benefit.


The Families First Coronavirus Response Act (FFCRA), passed in March 2020, provided a tax credit for employers to fund two types of paid employee leave required by the law. These leave requirements expired in December 2020. However, the tax credits were extended through March 31, 2021, for employers that chose to continue to provide FFCRA leave beyond Dec. 31, 2020.

The ARPA extends the FFCRA employer tax credit for voluntarily provided leave through Sept. 30, 2021, and adds employee time off related to COVID-19 testing and immunization as permissible reasons for taking the voluntary leave. It also increases the amount of wages eligible for the family leave credit from $10,000 to $12,000 per employee, and it provides an additional 10 days of voluntary emergency paid sick leave for employees, beginning April 1, 2021.


The ARPA extends three pandemic-related federal unemployment programs that were otherwise scheduled to end in March or April 2021. These include:

  • Pandemic Unemployment Assistance, which provides weekly benefits to independent contractors, self-employed individuals and other workers who would typically not be eligible for unemployment benefits;
  • Pandemic Emergency Unemployment Compensation, which provides weekly benefits to individuals who have exhausted their eligibility for all other unemployment benefits; and
  • Federal Pandemic Unemployment Compensation, which provides an additional $300 weekly payment to individuals who are already receiving PUA, PEUC or regular unemployment benefits.

Under the ARPA, all of these benefits are now available through Sept. 6, 2021.

The ARPA also changes how unemployment benefits received in 2020 are taxed. Specifically, it exempts the first $10,200 from federal income tax for each spouse in households with under $150,000 in adjusted gross income.


The ARPA temporarily increases the dollar amount and expands eligibility for federal subsidies for health insurance coverage purchased through the Affordable Care Act (ACA) Exchanges. Currently, the ACA’s premium tax credits are not available to individuals with income at or above 400% of the federal poverty level. The ARPA temporarily eliminates this income cap on these subsidies for a period of two years.

The law also:

  • Limits the total amount a household would be required to pay for health coverage through the Exchanges to 8.5% of their household income;
  • Increases the federal subsidy amounts available for lower-income individuals, eliminating premium costs completely for these individuals in some cases; and
  • Includes additional federal funding intended to encourage states that did not previously expand their Medicaid programs to do so now.

These ACA changes are temporary, and will expire after a period of two years.


For taxable years beginning after Dec. 31, 2020, and before Jan. 1, 2022, the ARPA increases the annual contribution limit for a dependent care assistance program (DCAP) from $5,000 to $10,500 (and from $2,500 to $5,250 for married individuals filing taxes separately).

Employers with DCAPs can retroactively amend their plans to incorporate this increase, if:

  • The amendment is adopted by the last day of the plan year in which it is effective; and
  • The plan operates consistently with the terms of the amendment until it is adopted.

Employee Retention Tax Credit

The ARPA extends the employee retention credit through the end of 2021 (the credit was set to expire in June 2021). This credit was originally enacted with the Coronavirus Aid, Relief and Economic Security (CARES) Act to encourage employers to retain on their payroll employees who could not report to work because of COVID-19-related reasons.

New features of this credit include:

  • Some small startups that began operating after Feb. 15, 2020, will be eligible for a maximum credit of up to $50,000 per quarter even if they do not experience an eligible decline in gross receipts, or a full or partial suspension; and
  • A new provision for “severely financially distressed” employers will begin in the third quarter of 2021. The provision will allow employers of any size to count all wages towards the $10,000 cap.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Reach out for more workplace guidance or to learn more about the power of voluntary benefits. Please contact us at any time at 305.238.1000.

IRS Extends Time to Make IRA, HSA Contributions and File Forms 1040

On March 29, 2021, the Internal Revenue Service issued Notice 2021-21, which extends tax deadlines for filing Form 1040 series returns and other deadlines to May 17, 2021. The Notice, issued as a result of the ongoing COVID-19 pandemic, follows a prior IRS extension (also to May 17, 2021) of the federal income tax filing due date for individuals for the 2020 tax year.

The Form 1040 series includes Form 1040, Form 1040-SR, Form 1040-NR, Form 1040-PR, and Form 1040-SS. Businesses and other types of taxpayers that file federal income tax returns on forms outside of the Form 1040 series are not eligible for the extension. In addition, the Notice does not alter the April 15, 2021 deadline for estimated tax payments.

Contributions to IRAs and Other Accounts

The Notice automatically postpones, to May 17, 2021, the time for individuals to make 2020 contributions to their individual retirement arrangements (IRAs and Roth IRAs), health savings accounts (HSAs), Archer medical savings accounts (Archer MSAs), and Coverdell education savings accounts.

Notice 2021-21 also postpones, to June 30, 2021, the due date for Form 5498 series returns related to these accounts (Form 5498, Form 5498-ESA, Form 5498-SA). These forms must usually be filed with the IRS and furnished to participants and beneficiaries by the due date specified in general instructions for other information returns. The period beginning on the original due date of those forms and ending on June 30, 2021, will be disregarded in calculating any penalty for failure to file.

Other Extended Deadlines

The Notice also extends, to May 17, 2021, the time to claim refunds for 2017 federal income tax returns and the time to file an application to voluntarily participate in the Annual Filing Season Program for calendar year 2021.

Important Dates

April 15, 2021: Original due date for Form 1040 series returns. Current deadline for estimated tax payments.

May 17, 2021: Extended deadline for Form 1040 series returns, 2020 IRA and other account contributions, reporting and payment of an additional tax related to 2020 IRA distributions, and 2017 refund claims.

June 30, 2021: Extended deadline for filing and furnishing the Form 5498 series.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Reach out for more workplace guidance or to learn more about the power of voluntary benefits. Please contact us at any time at 305.238.1000.

EEOC Opens EEO-1 Reporting Portal for 2019 and 2020 Data

The portal for private-sector employers to submit equal employment opportunity (EEO-1) workforce data from 2019 and 2020 is now open, the U.S. Equal Employment Opportunity Commission (EEOC) announced April 26, 2021. The deadline for submissions is July 19, 2021. This data collection was previously delayed due to the coronavirus pandemic.

EEO-1 Reporting Background

Mandated under Title VII of the Civil Rights Act, the EEO-1 Report is an annual survey that requires certain employers to submit information about their workforces by race or ethnicity, gender and job category by March 31 every year. The EEOC uses the collected data to enforce Title VII’s prohibitions against employment discrimination based on race, color, religion, national origin or sex.

Employers Subject to EEO-1 Reporting

In general, a private-sector employer is subject to EEO-1 reporting if it:

  • Has 100 or more employees;
  • Has 15-99 employees and is part of a group of employers with 100 or more employees; or
  • Is a federal contractor with 50 or more employees and a contract of $50,000 or more.

Employer Action Items

Employers that are subject to EEO-1 reporting requirements should begin submitting 2019 and 2020 EEO-1 data in the EEO-1 portal and ensure that they complete these submissions by July 19, 2021. These employers should also review the EEOC’s home page and new website dedicated to EEO data collections for additional information.

Important Dates

April 26, 2021: First day employers subject to EEO-1 reporting requirements may begin entering data from 2019 and 2020.

July 19, 2021: Last day for employers subject to EEO-1 reporting to submit 2019 and 2020 workforce data.

March 31, 2022: Deadline for submission of EEO-1 data from 2021. The law requires employers to submit reports by march 31 every year. Collection of 2019 and 2020 data was delayed due to the coronavirus pandemic.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Reach out for more workplace guidance or to learn more about the power of voluntary benefits. Please contact us at any time at 305.238.1000.

2021 Commercial Property Insurance Market Outlook

The commercial property market has steadily hardened in recent years, resulting in rate increases every quarter since Q3 2017. Unfortunately, these rate increases—as well as additional policy restrictions—are expected to continue in 2021. We predict that many insureds will experience double-digit rate increases, lowered available capacity and various policy restrictions or exclusions—especially regarding losses tied to weather events or the COVID-19 pandemic. Policyholders who conduct high-risk operations with poor loss control practices or are located in natural disaster-prone areas may encounter more severe rate changes, higher retentions and decreased coverage limits.

Trends to Watch

Natural disasters – In 2020, a range of natural disasters took place— including over 58,000 wildfires across the West Coast, hundreds of tornadoes in the Northeast and Southeast, a handful of hailstorms in the Midwest and a record-breaking number of hurricanes on the East Coast. These catastrophes are only expected to worsen in the coming years and often leave behind devastating property damage for affected establishments.

Civil unrest incidents – Occurrences of civil unrest—which have taken place in communities throughout the country this past year—can create unique challenges for business owners and their commercial properties. Namely, these incidents can leave businesses vulnerable to vandalism, stolen or damaged goods, and property damage. Civil unrest can also force establishments to temporarily close or alter business hours to ensure employee and customer safety, resulting in lost income.

COVID-19 and property coverage – While some organizations were granted a limited amount of protection under their property insurance policies for losses stemming from pandemic-related business interruptions, most businesses have encountered unresponsive policies due to either virus-related coverage exclusions or a lack of physical property damage—which is often a necessary policy trigger for business interruption claims. Most policies issued after the emergence of COVID-19 have incorporated specific exclusions for losses pertaining to communicable diseases or the pandemic.

2021 Price Prediction

Non-CAT exposed: +5% to +20%
CAT exposed: +10% to +25%
CAT exposed with poor loss history: +25% to +40%

Tips for Insurance Buyers

  • Work with your insurance professionals to begin the renewal process early. Timely, complete and quality submissions are vital to ensure your application will be reviewed by underwriters.
  • Gather as much data as possible regarding your existing risk management techniques. Be sure to work with your insurance professionals to present loss control measures you have in place.
  • Conduct a thorough inspection of both your commercial property and the surrounding area for specific risk management concerns. Implement additional mitigation measures as needed.
  • Address insurance carrier recommendations. Taking the appropriate steps to reduce your risks whenever possible can make your business more attractive to underwriters.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Reach out for more workplace guidance or to learn more about the power of voluntary benefits. Please contact us at any time at 305.238.1000.