Biden Seeks COBRA Subsidies, ACA Enhancements, Expanded Paid Leave
President Joe Biden released his initial COVID-19 aid plan late last week, asking Congress to approve a wide-ranging $1.9 trillion bill that proposes subsidies for COBRA continuation health coverage, increases Affordable Care Act subsidies, and both extends and expands employers’ paid leave obligations.
The broadly sketched “American Rescue Plan” leaves out details, and its cost and scope will be a hard sell with Republicans, but negotiations could yield a package that could pass the Senate with a filibuster-proof 60-vote majority. The plan’s centerpiece is a robust national vaccination and testing program that would also make vaccinations free for all regardless of immigration status.
While Biden’s preference is to move forward with a bipartisan aid package, Democrats are also prepping an alternative plan to pass a bill without GOP support using the budget reconciliation process. Reconciliation bills can pass the Senate with a simple majority vote, rather than the typical 60-vote threshold, although such legislation must have a direct effect on federal revenue. Top Democrats are signaling, however, that they are prepared to take quick and aggressive action to move the aid package via the reconciliation process.
After getting an aid package done, Democrats plan to pivot quickly to using the reconciliation process to enact more partisan pieces of Biden’s agenda, including ACA expansions and other priorities such as infrastructure spending and efforts to address climate change. Corporate and individual tax increases are on the table for that package as well.
COBRA continuation coverage. Biden’s plan calls for federal subsidies for COBRA continuation health coverage through September 2021 for those eligible for COBRA (generally, those who have lost their jobs), but does not specify an amount. House Democrats approved last year as part of the first HEROES Act a 100% subsidy that would have been retroactive to March 1, 2020, and covering virtually all workers who had been laid-off, furloughed, or had their hours cut. Individuals eligible for the subsidy would pay no portion of the premiums; employers and insurers could receive refundable tax credits equal to the premiums that individuals otherwise would have owed.
The $94 billion price tag and opposition to the provision from Republicans, however, caused Democrats to drop it from the second version of the HEROES Act passed by the House. A scaled-back COBRA subsidy could be in the mix, but without a generous subsidy, many unemployed workers probably could not afford coverage. Another potential hurdle: many progressive Democrats prefer to help the unemployed through expanded ACA subsidies or Medicaid coverage.
ACA subsidies. The plan also seeks to expand and increase the value of ACA subsidies available to lower health insurance premiums and ensure enrollees do not pay more than 8.5% of their income for coverage. While not currently proposed, employers need to watch for any attempts to make that 8.5% threshold the new ACA affordability standard for workplace coverage, which could raise their costs. There might also be calls to remove the current ACA “firewall” between employer plans and marketplace coverage, which Biden called for in campaign documents.
Expansion of paid leave. Biden also wants to reinstate through September 2021 the emergency paid sick and family leave benefit mandate that expired in December, while expanding coverage to employers with 500 or more employees. A refundable tax credit would also be extended, though it would not be available to employers with 500 or more employees.
The Families First Coronavirus Response Act relief package enacted last March required employers with fewer than 500 workers to provide two weeks of coronavirus-related sick leave and up to 12 weeks of family and medical leave and helped them offset the cost with the tax credit. Since then, the public health benefits of paid sick leave have been documented.
Meanwhile, momentum for a more permanent paid leave law seems to be building. Biden campaigned heavily on a pro-labor agenda that would guarantee workers 12 weeks of paid family and medical leave and seven days of paid sick leave. The idea is gaining bipartisan support, although Republicans and Democrats disagree on how best to pay for it. The employer community will continue to urge that any new paid leave requirements provide a nationally uniform compliance standard that would avert the need to comply with the growing patchwork of state and local rules.