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 May. Based on guidance from our mail fulfillment partner, we expect take almost two weeks but that all of the required notices will be postmarked and mailed prior to the May 31 deadline.
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 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 Wednesday May 5.
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 firstname.lastname@example.org.
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.