COBRA Premium Assistance provisions under ARP (American Rescue Plan Act of 2021)
The Premium Assistance Plan provides:
- 100% premium subsidy for the time period of April 1, 2021 through September 30, 2021 for COBRA Qualified Beneficiaries who lose (or lost) their employer’s group health plan coverage (and/or dental and vision coverage) due to involuntary termination or reduction in hours. (No other COBRA-qualifying events (voluntary termination of employment, death, divorce, loss of dependent status) qualify for a subsidy.)
- employers will need to adhere to reporting requirements in order to receive refundable payroll tax credits for the amount of subsidized COBRA premiums.
- employers may allow subsidy-eligible COBRA Qualified Beneficiaries to switch to less-expensive coverage.
- an eligible individual who did not elect COBRA, or who elected but dropped COBRA coverage prior to April 1, may receive the subsidy on a prospective basis, without having to elect and pay for COBRA retroactively for months prior to April 1.
- eligible COBRA Qualified Beneficiaries who are still within their original 18-month COBRA coverage period have a 60-day special election period. (from when the notice is mailed).
- that the subsidy includes employers subject to state continuation or mini-COBRA.
- that all qualified beneficiaries must be sent the model COBRA Continuation Notice in Connection with Extended Election Periods.
To be eligible, beneficiaries must:
- have a COBRA qualifying event (11/1/2019-4/1/2021) that is a reduction in hours or an involuntary termination of a covered employee’s employment.
- elect COBRA continuation coverage.
- not be eligible for Medicare; AND
- not be eligible for coverage under any other group health plan, such as a plan sponsored by a new employer or a spouse’s employer.
How does the Premium Assistance Plan work?:
- The employer pays the premium to the insurance carrier and takes a tax credit on their Federal taxes.
- Employers who use an administrator for COBRA services should check with that service to determine how premiums will be paid to the insurance carrier.
Are there any new notice requirements?
- A general notice must be sent to all qualified beneficiaries who have a qualifying event that is a reduction in hours or an involuntary termination of employment from April 1, 2021 through September 30, 2021. The plan administrator should also include the Summary of COBRA Premium Assistance Provisions under ARP. The general notice is for COBRA beneficiaries, the Alternative Notice is for state continuation beneficiaries.
- A notice of the extended COBRA election period to any Assistance Eligible Individual (or any individual who would be an Assistance Eligible Individual if a COBRA continuation coverage election were in effect) who had a qualifying event 5 ARP section 9501(a)(1)(A). 6 before April 1, 2021. The plan administrator should also include the Summary of COBRA Premium Assistance Provisions under ARP. This requirement does not include those individuals whose maximum COBRA continuation coverage period, if COBRA had been elected or not discontinued, would have ended before April 1, 2021 (generally, those with applicable qualifying events before October 1, 2019). This notice must be provided within 60 days following April 1, 2021 (that is, by May 31, 2021).
- The ARP also requires that plans and issuers provide individuals with a notice of expiration of periods of premium assistance explaining that the premium assistance for the individual will expire soon, the date of the expiration, and that the individual may be eligible for coverage without any premium assistance through COBRA continuation coverage or coverage under a group health plan. Coverage may also be available through Medicaid or the Health Insurance Marketplace®. This notice must be provided 15 – 45 days before the individual’s premium assistance expires.
Please check with your COBRA administrator to determine if they will be issuing the required notices on your behalf.
For further information, please review the attached COBRA Premium Assistance FAQs or contact your NEEBCo Account Manager or Benefits Consultant.