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COBRA Premiums

A 100% subsidy of COBRA premiums for involuntarily terminated employees is part of the recently enacted American Rescue Plan Act. The law establishes the subsidy for certain “assistance eligible individuals” (AEIs) from April 1, 2021, through Sept. 30, 2021.

An AEI is a qualified beneficiary who elects COBRA for a period of coverage within the subsidy period due to the involuntary termination or reduction of hours.

The employer (or, in some cases, the plan or insurer) will pay 100% of an AEI’s COBRA premium during that period and will be reimbursed by the U.S. government through a credit against payroll taxes, or for credit amounts exceeding payroll taxes, as a refund of an overpayment.

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