FAQ

American Rescue Plan Act (ARPA) | COBRA Subsidies

American Rescue Plan Act of 2021 FAQ

DISCLAIMER: The information shared is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.

What are key dates to ensure compliance to American Rescue Plan Act of 2021?

ARPA includes a provision for a COBRA continuation coverage premium subsidy of 100 percent for individuals and families who experienced a reduction in hours or involuntary termination of employment.

Key dates with regard to the COBRA Subsidy:

  • March 11, 2021 – Bill signed by President Biden
  • April 1, 2021 – Subsidy effective date
  • April 7, 2021 – the U.S. Department of Labor provided model subsidy notification and expiration notices
  • By May 31, 2021 – Assistance Eligible Individuals (AEIs) who became eligible for COBRA prior to April 1, 2021 notified of subsidy
  • Upon entitlement to elect COBRA – COBRA continuants who become eligible for COBRA on/after April 1, 2021 notified of subsidy
  • 60 Days from date the notice of subsidy is sent – the election period for second election by the AEI expires
  • 45 Days from expiration of an AEI’s subsidy period – provide model notice of expiration of subsidy
  • September 30, 2021 – general subsidy end date (subsidy may end earlier for particular individuals)

Back to top

Who is an Assistance Eligible Individual (AEI)?

The subsidy will be available for Assistance Eligible Individuals (AEIs), as determined by ARPA, from April 1, 2021 through September 30, 2021. Under ARPA, COBRA participants must meet the below criteria in order to be an AEI:

  1. Coverage was lost due to a reduction in hours or involuntary termination of employment.
  2. The COBRA participant is still within the COBRA coverage period as of April 1, 2021.
  3. The COBRA participant has not become eligible for coverage under another group health plan.
    – Subsidy eligible COBRA participants who do not have an election in place will have the opportunity to make an election during an Extended Election Period and will be able to take advantage of the subsidy effective April 1, 2021. This will be referred to as the “lookback period” in determining participant eligibility.
    – Subsidy eligible COBRA participants who have an election in place as of April 1, 2021, will be able to take advantage of the subsidy effective April 1, 2021.
    – Subsidy eligible COBRA participants who become eligible for COBRA continuation coverage on or after April 1, 2021, will be eligible for the subsidy while it is in effect.

Back to top

Who determines the eligibility for the subsidy?

Employers will need to identify individuals who have experienced a qualifying event for reduction in hours and/or involuntary termination.

Back to top

What is the additional election period?

ARPA provides an additional election opportunity for AEIs who previously did not elect, or elected and dropped, COBRA coverage. The election period deadline is 60 days from the date the notice of the additional election opportunity was provided to the AEI.

Back to top

Is the 60 days for the additional election period affected by the extended deadlines to elect and make payment for COBRA under the EBSA Disaster Relief Notices 2020-01/2021-01?

The extended deadlines under the EBSA Disaster Relief Notices do not apply to the notice or election periods related to the ARP COBRA subsidy.

Back to top

Does the ARPA subsidy allow a break in coverage?

Yes. The additional election opportunity allows an AEI to elect COBRA coverage from April 1, 2021 to the end of their original last day of COBRA without having to pay current on all premiums due, as long as the AEI is still within the original COBRA continuation period.

Back to top

Does the subsidy apply to dental, vision, EAP and HRA plans?

At this time the subsidy appears to apply to medical/RX, dental, vision, EAP and some HRA plans. FSAs are excluded.

Back to top

Does this subsidy extend the duration of COBRA for Assistance Eligible Individuals?

No. ARPA did not extend the overall COBRA continuation period.

Back to top

What is the process for refunds if a COBRA participant already paid the premiums for one of the months where the subsidy is available and the participant is an Assistance Eligible Individual?

In the case of an AEI who pays a premium for a subsidized month, the AEI will receive a credit against future payments, or a refund in certain circumstances.

Back to top

Do COBRA participants need to make their April 2021 premium payment?

COBRA participants may wish to pay their April 2021 premiums in order to ensure their coverage remains active, even if they believe they will be eligible for the subsidy. It is likely that AEI status will not be reflected in the system until after the April premium payment would be due. The ARP allows for requires individuals to receive a credit against future payments or refunds for any subsidized months.

Back to top

If a former employee who involuntarily terminated has enrolled in or has access to group coverage with another employer but is deemed an AEI according to our records, is that person eligible to drop their current employer’s coverage and enroll in fully subsidized COBRA coverage through our plan?

No. Eligibility for another group health plan would make the individual ineligible for the subsidy.

Back to top

If a participant did not elect COBRA when it was first offered to him or her and receives an additional election notice for April 1, 2021, would the participant be responsible for paying premiums for the months prior to April 1, 2021, or would the participant’s eligibility pick up on April 1, 2021, for the duration of the 18 months, not to go beyond the original 18 months?

The individual would not be responsible for paying premiums for months prior to April 1, 2021, unless the individual wished to have coverage during that time. The subsidized coverage would begin April 1, 2021, but would not go beyond the original duration of COBRA coverage.

Back to top