COBRA Subsidy Provisions of the American Rescue Plan Act
March 24, 2021

Highlights

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.


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 mini-COBRA 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.


Action Steps

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


Overview

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 mini-COBRA 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:


  • A plan covering only excepted benefits;
  • A qualified small employer health reimbursement arrangement; or
  • 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 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 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.

Sign up for our newsletter.

The Hidden Costs of Fragmented Workforce Management Vendors

September 2, 2025
Many businesses rely on multiple vendors to manage critical functions such as HR, payroll/HCM, benefits, commercial insurance, and retirement plans. While outsourcing can provide specialized expertise in each area, using separate providers often creates hidden costs that can quietly undermine efficiency, accuracy, and employee satisfaction. Here’s why integration matters, and how a consolidated approach can save time, reduce risk, and improve the employee experience. 1. Increased Administrative Burden When each service is managed by a separate vendor, administrative work multiplies. Employees and HR teams may spend extra hours logging into different systems to process payroll, submit benefits updates, or manage compliance tasks. Reconciling employee information across multiple portals and coordinating communications between vendors creates unnecessary complexity, which can distract your team from strategic priorities. 2. Higher Risk of Errors and Compliance Issues Fragmentation can increase the likelihood of costly mistakes. Payroll errors, mismanaged retirement contributions, and insurance coverage gaps often occur when systems do not communicate effectively. A single misalignment can have a ripple effect: Incorrect payroll deductions Late or missing retirement contributions Gaps in insurance coverage or compliance violations With multiple vendors, the risk of these errors and their consequences rises. 3. Limited Visibility and Reporting When each service lives in its own system, it’s hard to get a complete picture of your workforce. Without centralized reporting, many businesses struggle to: Analyze labor costs or benefits spending accurately Identify compliance gaps or coverage issues Track trends in employee engagement and retention Limited visibility makes it difficult to make informed decisions and optimize operations. 4. Compounded Costs Paying multiple vendors for separate services often results in more than just the sum of their fees. Each system typically comes with its own implementation, training, and subscription costs, which can quickly add up. In addition, internal administrative hours spent managing vendor relationships, reconciling conflicting data, or troubleshooting errors create a hidden expense that is often overlooked. Businesses may also face unexpected costs when trying to integrate or transfer data between disconnected platforms, or when compliance issues arise due to misaligned processes. Over time, these scattered costs compound, reducing overall efficiency and limiting resources that could be better spent on strategic growth initiatives. 5. Frustrated Employees The impact of fragmentation extends to employees. They may face confusion about where to access benefits or payroll information, experience delays in issue resolution, or encounter inconsistent communications. This frustration can lead to disengagement, lower productivity, and higher turnover. Businesses that integrate these functions provide a smoother, more cohesive experience for employees, resulting in higher satisfaction, better engagement, and a stronger workplace culture. Why Integration Matters Integrating HR, payroll/HCM, benefits, commercial insurance, and retirement services with a single partner simplifies operations, reduces errors, improves reporting, and enhances the employee experience. Businesses that consolidate services gain: Streamlined administrative processes and reduced duplication of effort Improved accuracy and compliance through connected systems Enhanced visibility into workforce metrics and financials Cost efficiencies by eliminating overlapping fees and redundant systems A more consistent, positive experience for employees By managing these services in a unified platform, your business can focus on growth instead of juggling multiple systems and vendors. Take the Next Step If your business is managing multiple vendors for HR, payroll, benefits, insurance, and retirement, it’s time to consider a more integrated approach. Streamlining these services with a single, high-touch partner like Simco can save time, reduce risk, and create a better experience for both your team and your employees.

Strategies for Supporting Employees During the School Year

August 25, 2025
As the 2025–26 school year gets underway, many employees are navigating the dual pressures of professional responsibilities and family life. For parents of school-aged children, this can mean adjusting to new routines, handling childcare logistics, and managing the emotional ups and downs that often accompany the start of the year. For employers, this season offers an opportunity to demonstrate support and strengthen employee loyalty. Below are nine strategies businesses can adopt to help their workforce balance work and family demands more effectively. Flexible Work Options Flexibility remains one of the most powerful ways to support working parents. Allowing employees to shift their schedules, such as starting earlier or later, or offering hybrid and remote work options helps parents handle school drop-offs, pickups, and unexpected schedule changes. For example, permitting an employee to work from home two mornings a week may relieve the stress of managing transportation while ensuring business needs are still met. When employees feel trusted to manage both work and family responsibilities, engagement and productivity rise. Back-to-School Support The transition into a new school year often involves extra expenses and planning. Employers can ease this burden by organizing back-to-school supply drives, offering stipends for educational expenses, or sharing curated lists of local resources like tutoring programs or after-school care. Some businesses even host “lunch and learn” sessions on topics such as family budgeting or time management during the school year. These gestures show employees that the company understands their life outside of work and wants to help them succeed in both areas. Prioritize Mental Well-Being Back-to-school season can be stressful for the whole family, with shifting routines, homework expectations, and social adjustments. Employers can proactively support mental health by promoting counseling services, stress management programs, or mindfulness workshops. Offering access to telehealth therapy sessions or creating quiet spaces in the office for breaks can make a tangible difference. Focusing on mental well-being helps employees feel cared for and creates a healthier, more resilient workforce overall. Paid Time Off for School Activities Balancing school commitments with work obligations can be difficult without supportive policies. By providing paid time off specifically for school-related events, such as parent-teacher conferences, school plays, or volunteering opportunities, employers can reduce the guilt or anxiety parents may feel about taking time away from work. Even a few hours of school-activity leave per semester can significantly boost morale and demonstrate the company’s commitment to work-life balance. Childcare Assistance Childcare remains one of the greatest stressors for working parents. Businesses can step in by offering childcare subsidies, backup childcare arrangements for emergencies, or partnerships with local providers to secure discounted rates. Employers with larger workforces may explore on-site childcare facilities or after-school program collaborations. Even simply sharing information about community resources and vetted childcare options can make a big difference for employees struggling to find reliable solutions. Open Communication Encouraging honest, ongoing conversations between managers and employees is essential. Managers should be trained to ask about potential school-year challenges, such as altered availability during drop-off hours or the need to leave for school events, without judgment. Creating a culture where employees feel safe discussing these needs allows managers to find practical solutions, like shifting deadlines or redistributing workloads, that benefit both the employee and the organization. Employee Assistance Programs (EAPs) EAPs are often underutilized, yet they can be invaluable during the school year. These programs typically offer access to counseling, parenting support, financial planning, and more. Employers should not only remind employees that these resources exist but also explain how they can be used during this time of year. For example, highlighting financial counseling services in September, when school-related expenses spike, makes the EAP more relevant and accessible. Family-Friendly Policies Workplace policies should reflect the realities of family life. Review scheduling practices to avoid early morning or late afternoon meetings when parents are often unavailable. Consider policies that allow parents to swap shifts or trade hours with coworkers. Involving employees in creating or revising family-friendly policies ensures the solutions are practical, widely supported, and foster an inclusive culture that values everyone’s needs. Recognition Matters Acknowledging the extra effort parents put in during the school year can have a lasting impact. Recognition doesn’t have to be large-scale, a personal thank-you note, a shout-out during a team meeting, or a small gift card can go a long way toward showing appreciation. Celebrating milestones, like surviving the first week back to school, helps parents feel seen and valued, reinforcing their commitment to the company. The Bottom Line Supporting employees during the school year goes beyond providing benefits; it’s about creating an empathetic, flexible, and responsive workplace culture. By adopting these strategies, businesses not only help their employees manage family responsibilities with confidence but also foster a more engaged, loyal, and productive workforce.
Is Your Business Ready for New York’s Secure Choice Savings Program (SCSP)?

Is Your Business Ready for New York’s Secure Choice Savings Program (SCSP)?

August 22, 2025
Big changes are on the horizon for New York businesses. Soon, many employers will be required to provide retirement savings options through the state’s Secure Choice Savings Program. If your business doesn’t already offer a retirement plan, now is the time to understand the rules, prepare your payroll, and explore whet

Have a question? Get in touch.