A $1.9 trillion COVID-19 relief bill, known as the American Rescue Plan Act of 2021 (ARPA), passed Congress on March 10th. As of this writing, the bill is on its way to President Joe Biden’s desk for his signature. There are several provisions included in the ARPA, but one to keep top of mind is the enactment of a six-month period during which the federal government will cover 100% of COBRA premiums.
What impact will this have?
The opportunity to have free COBRA coverage will be open to employees and their families who lost their health coverage due to being involuntary terminated or a reduction in available work hours during the COVID-19 pandemic. This six-month period will run from April 1st, 2021 to September 30th, 2021.
When an employee is terminated but chooses to remain on the company-sponsored group health plan, employers can mandate the worker to pay their COBRA premiums for up to 18 months (the maximum period of COBRA coverage). Some employers may choose to pay for the eligible individual’s COBRA coverage.
“Any employee who lost coverage as of April 2020 (when the pandemic began impacting employment) is potentially eligible for the entire six-month period from April 1 through September 30, 2021 when the subsidy ends,” the National Law Review reported. “Even employees who lost health coverage as far back as November 2019 may benefit from the subsidy, since their 18-month maximum COBRA period will not expire until the end of April 2021.”
In addition to subsidizing the COBRA premiums, the ARPA expands eligible individuals’ options for coverage. Employees who did not initially elect COBRA coverage during their original election period will now have another option to enroll (starting on April 1st and ending 60 days after they receive a COBRA notification). Laid-off employees will also have a 90-day period after receiving a COBRA notice to enroll in a group health plan different from the one offered by their employer. If an individual chooses to do so, the second group health plan option must not have a higher premium than the one they chose to leave.
Please note any employee is eligible for another group health plan or Medicare does qualify for the ARPA COBRA subsidy.
What do employers need to do?
Employers will be responsible for alerting eligible individuals of this provision within 60 days of April 1st, 2021. According to SHRM, employers will also be required by the ARPA to amend COBRA notice forms to include the following:
- Forms necessary for establishing COBRA eligibility
- The contact information of the plan administrator
- Information that details the extended election period
- Description of the employee’s option to elect in different coverage
“Plans will also be required to notify individuals if their subsidy will end before Sept. 30, 2021, although this notice will not be required if their subsidy is ending due to the individual’s eligibility for other coverage,” SHRM stated.
The U.S. Department of Labor is expected to begin issuing model notices in the coming weeks for employers’ reference.
ACTION ITEM: Begin to gather a list of COBRA-eligible individuals who experienced a qualifying event in 2020 to whom you may need to send the aforementioned notices.
Is there anything else I should be aware of?
The ARPA includes other important relief provisions, such as incoming $1,400 stimulus checks and weekly unemployment add-ons. We have included a more specific overview of the COBRA premium assistance program below for you to download and review.
In the coming weeks, Katz/Pierz will share more detailed information about other provisions of the ARPA. If you have any specific questions about your group health plan, please reach out to your Katz/Pierz representative.