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The Biden Administration’s American Rescue Plan expands access to healthcare coverage to millions of Americans and includes a new COBRA coverage subsidy. The American Rescue Plan Act provides fully subsidized COBRA premiums. This new revision allows employers to reduce an employee’s premium to zero in anticipation of a credit and will reduce an employer’s ACA penalty risk.
In the past year, many employers reduced employee’s hours to contain costs, which would regularly put you at a greater risk for Penalty B if the cost of COBRA exceeds ACA affordability limits. However, from April 1 to September 30, 2021, COBRA premiums will not be charged to employees, and will be recouped by the applicable entity through a tax credit.
In this blog we will take a close look at the implications this law may have on your business.