Gulfshore Insurance > Gulfshore Blog > COVID-19 > New Relief Package Grants Free COBRA Coverage for Qualifying Employees

Employee Benefits New Relief Package Grants Free COBRA Coverage for Qualifying EmployeesOne of the many lifelines for workers in the American Rescue Plan Act of 2021 (ARPA) is a new COBRA subsidy that completely covers the cost of continuation coverage for qualifying individuals from April 2021 through September 2021. Here’s what you need to know about this important health insurance assistance.

What is the COBRA Subsidy that Just Became Law?
The new Biden administration hopes to make it easier for people to access this essential healthcare. With the March 2021 passage of ARPA, the administration stepped in to subsidize the full cost of COBRA coverage through the end of September 2021.

But, why pass this subsidy now?
When a person is employed, a portion of their health insurance premium is often paid for by the employer. But, if someone is laid off or has their hours cut—as many millions of Americans experienced during the course of coronavirus pandemic—and they decide to opt to continue coverage under COBRA, they’re typically responsible for the full cost of the health insurance premium.

The amount charged for COBRA coverage can’t exceed 102% of the cost of the plan, but temporary health insurance is often more difficult to buy without a steady income—and costs can reach nearly $500 per person, per month. These complications are what make the new COBRA subsidy so important, as it’s designed to provide key assistance for struggling workers.

COBRA Subsidy 2021 Eligibility
Every employee who involuntarily loses their health insurance beginning in April 2021 is eligible for the entire sixth-month subsidy—including if they experienced a reduction in hours. Employers and employees alike should note that the subsidy only covers the cost of the health insurance premiums, not copays, deductibles, or co-insurance.

How Will the 2021 COBRA Subsidy Help Employees and Employers?
The 2021 COBRA subsidy is likely to impact both employees and employers in the following ways:

  • For employees, this provision can help qualifying individuals maintain health plan coverage—especially important during a dangerous pandemic.
  • For employers, laid-off employees would still have access to the organization’s health plan at no cost to the employer or the worker. However, there may be some administrative difficulties for employers administering the subsidy.

Experts are still working through the details of the bill and its many provisions. In an article published by SHRM, the publication notes that the subsidy will be delivered to employers first using a payroll tax credit, who will then pass it on to employees (or former employees) who are enrolled in COBRA.

What Else Should Employers Know About Free COBRA Coverage?
The ink on ARPA is still fresh, meaning that employers can expect more guidance from federal agencies as it becomes available.

With this in mind, the coverage period for this subsidy begins on April 1, 2021, and ends on Sept. 30, 2021. Employers must notify their employees about this subsidy beginning April 1, and can expect the Department of Labor (DOL) to provide sample notification letters for employers to use when communicating these options to their employees.


Ryan Laude is a Client Advisor at Gulfshore Insurance specializing in employee benefits. Ryan works with a wide range of businesses to create the best funding options that fit their needs. Comments and questions are welcome at

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in employee benefits insurance including group medical, dental, vision, life insurance, short and long term disability, voluntary life, employee assistance programs, wellness programs, individual life insurance, and more. Our insurance and risk management advisors are experts can provide valuable services including benefits plan design and administration, human resources support, funding options, compliance assistance, benefit administration, and enrollment services. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.