The American Rescue Plan Act (ARPA) was signed into law by President Biden on March 11, 2021 and seeks to address the pandemic’s impact on the uninsured in the United States.
A significant source of people who are uninsured comes from those who have lost their jobs due to the economic impact of the pandemic. It was estimated that up to 27 million employed Americans are at risk for losing their health insurance during the pandemic. The loss of health insurance is never convenient, however, during a health pandemic it can be risky.
When someone who is covered by an employer plan loses their job, their health insurance options are to accept high-cost COBRA insurance to continue their employer plan, enroll in an ACA plan, or consider other options – including the possibility of becoming uninsured. Health insurance is considered such an important employer benefit that 51% would think twice about switching jobs because of their health insurance.
As a result, the ARPA addresses health insurance for those who lost their employer coverage during the pandemic by covering 100% of the cost of the COBRA coverage.
What Is COBRA?
The Consolidated Omnibus Reconciliation Act (COBRA) gives employees and their family members, in certain circumstances, who were covered by their employer health insurance plan the opportunity to continue to pay the premiums for their health insurance plan for up to 18 months after employment terminates or hours are reduced.
COBRA is typically expensive because the employee is now paying for the entire cost of the health insurance, without any contribution from the employer. In 2020, the average annual premium for employer sponsored health insurance was $7,470 for an individual and $21,342 for a family. As a result, although continuing health insurance is desirable, paying for COBRA can be expensive for someone who is no longer employed.
Stimulus Bill Is Covering the Cost of COBRA
Under the ARPA, the federal government will cover 100% of the cost of the COBRA premium for individuals who have been let go from their jobs since the beginning of the pandemic. The premium subsidy will extend from April 1, 2021 to September 30, 2021.
It Isn’t Too Late
For those who have already lost their job and declined COBRA, they will have another opportunity to sign up and receive their COBRA fully subsidized! This is excellent news for anyone who is uninsured or whose insurance doesn’t meet their needs.
It is important to know that under the ARPA, COBRA will cover claims for the period of COBRA coverage from April 1 to September 30. For example, if your COBRA begins on April 1, any claims made after that date and before September 30th will be paid. However, if you were laid-off several months ago, and you are electing COBRA now under the ARPA, then your COBRA begins on April 1 and if you visited the doctor on March 15, the claims prior to April 1 will not be covered by COBRA. It’s important to understand that invoking the ARPA to claim COBRA is different from the traditional way employees select it--where employees have sixty days to elect COBRA and if they select it on the very last day, they are charged the previous months premiums and medical expenses incurred during the election window are covered.
For many, employer sponsored health insurance provides excellent healthcare and its loss can be devastating. Familiar insurance plans with known doctors are important, especially during a health pandemic. In an effort that recognizes the importance of employer sponsored health insurance, the ARPA will provide subsidy free COBRA plans to many who are in need – and just in time.
Jan Dubauskas is a healthcare expert, enthusiastic insurance pro, attorney and mom serving as Vice President of healthinsurance.com
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