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Admin America COBRA Premium Assistance Administration Update

We wanted to provide you with a brief update on our current plan for assisting clients with the compliance obligations imposed by the new COBRA Premium Assistance benefit provided through the American Rescue Plan Act of 2021 (ARPA).   More general information about this new benefit is available from a previous blog post we published online here.  Alternatively, you can access a recording of a recent webinar we presented about the Premium Assistance benefit here.

This post contains information about our plans to provide the notices required under the new law to individuals who could qualify as Assistance Eligible Individuals (AEIs).  There will be supplemental fees for this service so this message provides information for groups who may wish to opt-out of our notice service and provide the notices on their own.  This post will also address Admin America’s plans to verify AEI status of applicants with their former employers.  Lastly, this post will address our current plans to provide information regarding the applicable premium amounts that employers will then be able to claim as credits against their periodic payroll tax deposits with the IRS. 

The Required Notices

Under the new law, employers subject to COBRA are required to provide written notice to individuals who may qualify for the COBRA Premium Assistance.  These individuals include any COBRA Qualified Beneficiaries who experienced an involuntary loss of coverage due to a termination of employment or reduction of hours effective any time on or after November 1, 2019.   For certain groups, this will include terminations that occurred during October 2019 as well.  The required notices must be provided to the designated individuals no later than May 31, 2021. 

Admin America intends to begin providing these notices on behalf of our COBRA clients during the last two weeks of April.   Our intention is to provide the notice to all Qualified Beneficiaries who experienced a termination of employment or reduction of hours related loss of coverage during the applicable period regardless of whether the event may have been previously labeled as voluntary or involuntary.  Because the non-compliance penalty for failure to send the required notice is so high ($100 per day per letter), we are choosing to err on the side of caution with regards to notice delivery.  We have observed too many instances recently of employers mislabeling involuntary terminations as voluntary and we want to avoid employers being assessed penalties for failure to send a notice to an individual whose termination is mislabeled in that way.

Admin America currently expects the Department of Labor to release the model language for the required notice no later than April 10.  The software developer of our COBRA administrative platform has committed to providing all necessary system updates (including incorporating the model language into the system’s letter templates) on Saturday April 17.   Based on that, it is Admin America’s intention to begin processing the required notices out to Qualified Beneficiaries through our mailing fulfillment service on Monday April 19.  We expect that this process will be complete no later than Friday April 30.   

Admin America will invoice clients $2.00 per notice for providing the additional notices required under ARPA for any Qualified Beneficiary to whom Admin America has previously provided a COBRA Election Letter.   Admin America will not charge a per notice fee for Qualified Beneficiaries who are provided the required notice as part of their original COBRA Election Letter.  This generally will apply to Qualified Beneficiaries whose Qualifying Event occurred after President Biden’s signing of ARPA on March 11.   Admin America has intentionally delayed sending those individual’s COBRA Election Letters to avoid unnecessary duplicate letters and the corresponding expense for our clients.  Clients wishing to provide the required notices on their own (and avoid the corresponding $2.00 per notice fee) may complete an online opt-out form here.  Opt-out forms must be completed no later than Friday April 16.  

Important note for clients who do not opt-out of Admin America’s provision of notices to their Qualified Beneficiaries.  Clients who commenced monthly COBRA administration services with Admin America on or before October 1, 2019 do not need to take any action for notices to be delivered to all applicable Qualified Beneficiaries.  Admin America will have all of the necessary historical data to provide the required notice.  The only exception to this would be if the client has any address updates that it wishes to provide to Admin America.  Address updates for a specific Qualified Beneficiary can be submitted directly through the Employer Portal of Admin America’s COBRA software.  Alternatively, clients who commenced monthly COBRA administration services after November 1, 2019 may have Qualified Beneficiaries who require supplemental notices but for whom Admin America does not have historical data needed to provide the notices.  Those clients may request a data template to provide Admin America with information about any Qualified Beneficiaries who experienced Qualifying Events prior to Admin America’s commencement of monthly administrative services.  Admin America will charge $6.00 per notice for these individuals.  Clients may request the data template for this purpose by completing the online form found here.

Assistance Eligible Employee Verification

Qualified Beneficiaries will have 60 days from the date their notice is mailed to elect coverage and verify that they qualify as an AEI.  Their notice will provide them with instructions for completing an online eligibility form.  An alternative paper application process will also be provided for any Qualified Beneficiaries without computer access.  Once a Qualified Beneficiary completes a COBRA election application, the individual’s former employer will receive an e-mail notification.  A representative of the employer will be asked to verify the involuntary nature of the Qualified Beneficiary’s employment termination (or reduction of hours).  The verification (or denial) will be made through a simple internet form.  If the employer verifies that the loss of coverage was involuntary, Admin America will process the COBRA election.  Alternatively, if the employer indicates that the Qualifying Event was voluntary, Admin America will issue a benefit denial to the Qualified Beneficiary including information about any applicable appeals rights.

COBRA Enrollment and Premium Reporting

For any Qualified Beneficiary that applies and is verified by their former employer as an Assistance Eligible Individual, Admin America will process the applicable coverage reinstatement(s) with the appropriate insurance carriers or plan administrators.  Admin America will also track the applicable premium amounts for the coverages elected by Assistance Eligible Individuals.  Admin America will report these amounts to the applicable employers each month for the duration of the Premium Assistance benefit program (currently scheduled to expire at the end of September 2021.  It is also expected that employers will be able to access this information at any time on demand through the employer portal of Admin America’s COBRA administrative platform.

As part of the reporting process, Admin America will also invoice employers for the allowable 2% COBRA administrative fee.  This amount will be included in the reports sent by Admin America and may be claimed as a payroll tax credit from the IRS along with the actual premium amounts.

We hope this information clarifies any questions you have about Admin America’s administrative plan for the Premium Assistance benefit.  However you may address any additional questions directly to Trey Tompkins via e-mail at trey@adminamerica.com

Thank you for entrusting Admin America with your COBRA compliance administration.  We will continue to work diligently to make this process as simple for you and your employees as possible. 

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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