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COBRA Premium Assistance in the New Federal COVID-19 Relief Package

Earlier today President Biden signed the ‘‘American Rescue Plan Act of 2021’’ (ARPA) which contains numerous provisions to aid individuals, businesses and state and local governments impacted by the coronavirus pandemic.  Included among those provisions is funding to pay COBRA premiums for individuals who lost their group health insurance coverage during the pandemic.  

ARPA’s COBRA Premium Assistance will pay 100% of the applicable premium for “Assistance Eligible Individuals (AEIs)” during the months of April 2021 through September 2021.  AEIs are COBRA Qualified Beneficiaries who’s Qualifying Event was an involuntary termination of employment or reduction of hours who are not currently eligible for other group health plan coverage or Medicare.  AEIs can be Qualified Beneficiary who’s original 18 month maximum period of COBRA would have extended into April 2020.  Therefore, AEIs could include individuals who lost coverage due to an involuntary termination of employment or reduction of hours that occurred as long ago as October 2, 2019.    

ARPA requires employers to send a special supplemental COBRA Notice to any potential AEIs with information about the COBRA Premium Assistance no later than May 30, 2021.  The U.S. Department of Labor is tasked with providing Model Notices for this purpose no later than April 10, 2021. 

AEIs who elect COBRA coverage as a result of the COBRA Premium Assistance Notice may start their coverage beginning in April 2021.  ARPA overrides the standard COBRA requirement that requires Qualified Beneficiaries to elect coverage (and pay for it) back to their original loss of coverage date.  ARPA does not extend a Qualified Beneficiary’s maximum period of coverage beyond the 18th month after the original loss of coverage. 

ARPA also requires employer to send a second notice later this summer to AEIs regarding the end of the COBRA Premium Assistance.  Admin America will be able to assist employers with the delivery of both required supplemental notices at the appropriate time.  Admin America will also track AEI COBRA premiums to assist employers with adjusting and paying their insurance carrier invoices and/or claiming the federal tax credit that is available to offset the unpaid COBRA premiums.

To better help employers and their employee benefits advisors understand the details of ARPA’s COBRA Premium Assistance provisions and Admin America’s administrative response, we will be scheduling multiple webinars in the upcoming weeks to review the changes.  Attendees will also have the ability to ask questions.  Online registration for the webinar sessions is available here.  Admin America will be providing additional communications to employers and advisors in the coming weeks as expected regulatory guidance is released and Admin America’s new procedures are finalized.  Any immediate questions may be directed to Trey Tompkins via e-mail at trey@adminamerica.com.

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Update on COVID-19-Related Extensions Impacting COBRA and Claims Filing Deadlines

Last week the U.S. Department of Labor issued guidance regarding when certain COVID-19 related deadline extensions will end.  This new guidance was released in EBSA Disaster Relief Notice 2021-01 which can be found online here.  In short, the guidance clarifies that deadline extensions will continue beyond March 1, 2020 but the length of each deadline extension is determined on a case-by-case basis (instead of all deadlines ending on the same future day) and limited to one year. 

The guidance issued last week supplemented guidance originally announced last May by the DOL and the IRS (available online here).  The COVID related deadline extensions announced last year required group health plans to disregard certain deadlines under COBRA, ERISA and HIPAA.   Last May’s guidance had a clear starting point.  It applied to any deadlines that would have otherwise occurred on or after March 1, 2020.  The end point was not as clear.  There was not a specific date announced as to when the deadline relief would end. Instead it provided that the period for calculating deadlines would not start again until 60 days after the COVID-19 national emergency was declared over by the President.   While that definition seems specific, it was complicated by a one year limit on the DOL and IRS’s ability to extend these types of deadlines.  Therefore, as February 28, 2021 approached, there was uncertainty as to how the end of the deadline extensions would impact plans and participants.

Notice 2021-01 clarifies that applicable deadlines will be extended until the earlier of (1) one year from the date the deadline would have otherwise applied, or (2) 60 days after the end of the announced COVID-19 National Emergency. Once the extension period has ended, the period of time for determining the applicable deadline will resume. For example, if a COBRA qualified beneficiary would have been required to make a COBRA election by May 15, 2020, the deadline is extended until May 15, 2021. Similarly, a qualified beneficiary whose COBRA premium payment grace period for November 2020 should have ended on November 30, 2020 may now pay their premium for November 2020 coverage as late as November 30, 2021 (presuming the COVID National Emergency does not end at least 60 days before that date).

The Notice also indicates that plans should consider sending updated notices to participants regarding their revised deadlines. Plans are also advised to consider notifying participants who are losing coverage of other coverage options, such as through the recently announced COVID-19 special enrollment period in the Exchanges. The notice acknowledges that the COVID-19 pandemic and other circumstances may disrupt normal plan operations and reassures employers acting in good faith and with reasonable diligence that enforcement will emphasize compliance assistance and other relief. The notice indicates that other federal agencies with jurisdiction over employer sponsored group health plans concur with this new guidance and its application to laws under their jurisdiction.

Admin America is working with the vendors of our benefits administration software to incorporate this new guidance into our administrative procedures with the expectation that the necessary adjustments will be completed this month.  Employers and/or their professional benefits advisors with any questions about this most recent guidance are invited to submit their questions via Admin America’s online Q&A portal available here


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FSA Related Provisions In The Federal Government’s New COVID Relief Package

This month Congress passed and President Trump signed the latest COVID related relief bill, the Consolidated Appropriations Act of 2021.  The new law includes several provisions that provide potential relief for Health and Dependent Care Flexible Spending Arrangement Participants.  Employer Plan Sponsors are allowed, but not required, to amend their plans to permit the following:

  • Carryover of unused funds from a Plan Year ending during 2020 or  2021 to the following Plan Year;
  • Extend Grace Periods applicable for Plan Years ending during 2020 or 2021 to 12 months after the end of the Plan Year;
  • Allow Plan Participants who cease participation in a Health FSA during calendar 2020 or 2021 the opportunity to receive reimbursements from unused benefits or contributions through the end of the plan year in which such participation ceased (including grace period if applicable);
  • Increase the maximum age (by one year) for Dependent Care beneficiaries who aged out during the pandemic; and
  • Prospective modifications of election amounts for Health and Dependent care FSAs for Plan Years ending in 2021.

We wanted you to be aware of the provisions outlined above in the new law as soon as possible to give you an opportunity to consider them and possibly communicate them to Plan Participants.  

Any of the permissive changes listed above will require Plan Amendments (which may be completed retroactively any time during 2021) if elected.  Admin America, Inc. will be following up again with customers in the coming days to provide a process for electing any of the available options.

We also would like to point out that the administration of the additional rollover amounts and grace periods will require programming changes to Admin America, Inc.’s administrative platform.  Therefore, we cannot advise at this time as to when rollover amounts in excess of the previously announced limits will be available to Plan Participants via their electronic payment cards.  We will provide an update on the timing of any system updates as soon as we have more information.

Thank you and Happy New Year!