ARPA Changes to COBRA
President Joe Biden signed the American Rescue Plan Act of 2021 (ARPA) into law on March 11, 2021. The ARPA has made changes to how groups offering employee benefits (i.e., health, dental, and vision) will administer COBRA (employers over 20 employees) or State Continuation Coverage (employers with less than 20 employees).
What does this mean?
The new law states that employees who became COBRA/Continuation eligible from 11/01/2019 through 09/30/2021 due to involuntary termination or reduction of hours may be eligible to elect COBRA/Continuation coverage effective 04/01/2021 through 09/30/2021 at no cost to them. The only exception to involuntary termination is termination for gross misconduct.
Who pays for the premium?
Employers will be responsible for paying the monthly premium to carriers, they will then be reimbursed via payroll taxes by the Federal Government. Employers with questions on the reimbursement process should contact their payroll provider for specific details.
What are my responsibilities as the employer?
Employers will need to go through their records back to November 2019 to present for employees that meet the new law’s eligibility requirements. Employees may be eligible even if they declined COBRA or state continuation when they were first eligible.
Employers are then required to provide the appropriate notice(s) to employees that meet the requirements (involuntary termination or reduction of hours); notice(s) must be postmarked by May 31, 2021. The Department of Labor may impose fines for not providing the necessary notices to employees by the deadline. To be on the safe side, it would be Thams Agency’s recommendation to send notices to all COBRA/Continuation eligible employees, as this may save issues later.
Notices to use.
The following explains which notice should be sent to employees based on their situation as well as a link to the fillable notice for employers to use.
- Send this notice to employees who were, are, or will become COBRA eligible from 04/01/2021 – 09/30/2021.
- Send this notice to employees subject to State Continuation requirements from 04/01/2021 – 09/30/2021.
- Send this notice to employees currently enrolled in COBRA/Continuation due to reduction of hours or involuntary termination, as well as those who would currently be eligible to receive their premiums are no cost if they elected and/or maintained COBRA/Continuation when first eligible (employees that meet the requirements retro back to 11/01/2019).
- Send this notice to employees in all scenarios, the below notice should be sent in addition to the General Notice.
- Send this notice to employees that elect COBRA/Continuation and receive it at no cost from 04/01/2021-09/30/2021 to inform them of the end of premium assistance. This must be sent 15-45 days before the premium assistance ends.
The ARPA allows Assistance Eligible Individuals to receive 100% subsidized COBRA or State Continuation coverage from 04/01/2021 to 09/30/2021. An Assistance Eligible Individual is a COBRA Qualified Beneficiary (QB) who meets COBRA requirements (reduction of hours or involuntary termination) during the period 11/01/2019-09/30/2021 AND elects COBRA or State Continuation. The Federal Government will be funding the subsidies and will be reimbursing employers via payroll taxes. The Department of Labor has a webpage dedicated to the ARPA COBRA subsidy that includes an FAQ section web page.
Thams Agency continues to review the regulations around this new law and will continue to post updates as we receive them. As a reminder, it is the employer’s responsibility to send the appropriate notice(s) to eligible employees by May 31. 2021. Please contact Thams Agency at firstname.lastname@example.org with any questions regarding this new law, we are here to help.