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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