American Rescue Plan Act (ARPA) COBRA Subsidy Extended Election Periods Notice Required by May 31
Most employers have heard the news that per the American Rescue Plan Act (ARPA) they must subsidize 100% of COBRA Continuation Coverage premiums for some former employees and their qualifying family members. The new law requires employers to send out new COBRA notices based on the original termination circumstance with the deadline to send the Extended Election Period Notices to those who qualify on May 31, 2021. This newsletter will focus on who is eligible, what the extended election period is and how Assistance Eligible Individual’s (AEI) can have another opportunity to enroll.
Who is an Assistance Eligible Individual?
Individuals are eligible for this COBRA subsidy if they:
- Are a qualified beneficiary of the group health plan; and
- Are eligible for COBRA or mini-COBRA continuation coverage because of the covered employee’s involuntary termination (unrelated to gross misconduct) or reduction in hours of employment.
The subsidy is not available for people who left their job voluntarily or were terminated for gross misconduct. It is also unavailable for people who are eligible for either Medicare or another group health plan, not including:
- A plan covering only excepted benefits;
- A qualified small employer health reimbursement arrangement; or
- A flexible spending arrangement.
Furthermore, individuals receiving a COBRA subsidy who become eligible for a group health plan or Medicare must inform the health plan for which they are receiving the subsidy of that fact or face a penalty.
What is the Extended Election Period?
The ARPA allows individuals to elect subsidized COBRA if they:
- Previously declined COBRA or mini-COBRA after becoming eligible due to involuntary job termination (not caused by gross misconduct) or reduction in hours, but would still be within their COBRA or mini-COBRA coverage period had they elected the coverage at that point; or
- Previously elected COBRA or mini-COBRA but discontinued the coverage before April 1, 2021.
The election period for subsidized COBRA under ARPA begins on April 1, 2021 and runs until 60 days after the date individuals receive notice from the health plan of the availability of the COBRA subsidy.
The applicable notice to use is the Model Notice in Connection with Extended Election Period. MS Word
The notice informs AEIs that they may elect COBRA coverage for the remainder of their “owed” coverage and that you, the employer, are responsible for paying 100% of their COBRA premiums for their remaining coverage from April 1st to September 30th 2021.
If the AEI believes they meet the criteria for the premium assistance, they will complete the “Request for Treatment as an Assistance Eligible Individual.” You should include this with the Model Notice in Connection with Extended Election Period. MS Word
What are the Next Steps?
Employers who outsource COBRA administration to a third party vendor should reach out to either their administrator or their Capital Group Account Management Team to discuss what they will be administering and what forms or notices you will be responsible for providing to AEIs.
Employers who administer COBRA in-house should look back at employees who have experienced an involuntary termination of employment or have had a reduction in hours (back to November 2019) who were eligible for COBRA. These employees are eligible for this second notice and you should work to make sure these eligible employees are notified by May 31st.