On March 11, President Biden signed into law the American Rescue Plan Act (ARPA) of 2021. The $1.9 trillion bill includes direct economic impact payments for qualifying individuals and families, extended unemployment benefits, temporarily extended child tax credits, and funding for education, public health, and other pandemic response priorities.
COBRA Provisions
The law provides 100% subsidies to assistance eligible individuals for COBRA continuation coverage due to involuntary termination or reduction in hours. These subsidies will be available beginning April 1, 2021 through September 30, 2021 and any workers denied premium assistance will have access to an expedited review process.
It offers an extended election period to allow individuals who previously experienced a qualifying event to enroll in subsidized coverage. Those individuals who did not make an election when first eligible due to the cost, as well as those who dropped COBRA at a later date due to the expense, may now make a new election under COBRA.
Employers have the option to offer employees enrollment in other employer-sponsored health plan selections if the other selection is less expensive than the option the employee was enrolled in prior to the loss of coverage.
The agencies will provide Model Notices within the next 30 days, as group health plans, insurers, and administrators must present the above opportunities in clear and understandable language within 60 days of subsidy availability, which is May 31, 2021.
Employers will offset the cost of the subsidies by claiming a credit against Medicare payroll taxes.
As more guidance is released from the government, we will work with our clients to ensure that proper notices are generated regarding COBRA eligibility and subsidy availability,
WebTPA Action Regarding Relief Period Deadlines
On March 2, we shared an update concerning the Department of Labor’s new guidance on the Outbreak Period and EBSA Disaster Relief Notice 2021-01. Since then, we have identified the affected COBRA qualified beneficiaries and constructed a notification process for participants who elected COBRA and did not pay anything since their election and others who elected COBRA but stopped paying monthly premiums at some point.
The notices will inform the affected participants of the specific end dates of their own personal 12 month extension and the 30-day period after their end date to pay the outstanding premiums. The end dates will vary by participant. We have been holding off on starting the notification to COBRA qualified beneficiaries as we waited to see of the ARPA (explained above) would pass and if there would be further implications on COBRA participants and potential elections. We are working to synchronize these two sets of guidance and to create a communication plan for COBRA participants.
Ongoing Communication
WebTPA is closely watching and discussing several legislative proposals that will influence the administration of your plan. We will provide regular updates and we appreciate your partnership with the quick pace of such developments. Questions and concerns may be forwarded to your Account Management contact.