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Biden’s COBRA Subsidy Proposal and What It Means for You

Posted January 21, 2021

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Last week, then-President-elect Biden released his proposal for the next COVID relief/economic stimulus bill. The proposal called on Congress to subsidize COBRA continuation coverage through the end of September. 

This is encouraging news for Americans who have lost their employer health insurance due to the pandemic-induced recession. If enacted, this provision would make it more affordable for those affected to continue their employer health coverage. This would help them avoid:

  • Disruptions in coverage 
  • Exposure to higher deductibles 
  • Resetting of deductibles mid-year
  • Potentially finding their doctors and other providers not in the network of an ACA plan.  

Our role as advocates

WEX has been deeply involved in advocating for a COBRA subsidy since last March, meeting with key congressional staff and allied interest groups and acting as a resource on the feasibility of various proposals.

While the President’s proposal is encouraging, there is a long way to go before it is enacted into law. A stimulus bill will be passed, but what will be in it is far from settled. 

We have already begun to double down on our advocacy work, first to build support to include the subsidy in the bill, and then to ensure it survives through the legislative process and remains intact in the final bill. Our early intel is to expect the bill to move to a final vote sometime in early March, although that timeline could move up or back.

Are there any other specifics on this proposal?

There are no further specifics about the proposed subsidy at this time, but we are well-positioned to get an early look at legislative language as it is drafted. We have reviewed every bill that has been proposed since last March, socializing them through our product, technology, and operations teams to determine what modifications would be needed and how administrators can operationalize the proposed subsidy. We will do the same when we see the current proposal take shape, so that we can move forward quickly should a COBRA subsidy pass.  

At the same time, we will be on sharp lookout for any elements in the detailed proposal that are unworkable or present significant challenges for employers and administrators and will be quick to provide feedback to congressional staff in an effort to avoid any unintended consequences.

Potential changes and our platform

The good news is that the WEX platform has experience with COBRA subsidies, having supported the subsidy included in the American Recovery and Reinvestment Act of 2009. While we don’t have any guarantees about what the new proposal will look like in detail, the proposals drafted last year largely followed the 2009 model, and that is likely where things will start this time around if a subsidy makes it into the first draft of the bill.

We will follow up if and as significant news breaks on this subject.  

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel. 

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