The American Rescue Plan Act and COBRA
Allows government subsidies for COBRA premiums for six month period
The American Rescue Plan Act of 2021 (ARPA) which was signed into law by Congress March 10, 2021 contains a series of new provisions temporarily modifying COBRA. This ARPA provision allows Assistance Eligible Individuals (AEIs) who lost health coverage (including dental and vision coverage) due to their or their family member’s involuntary termination or reduction in hours to receive COBRA coverage with a premium reduction of 100% from April 1, 2021 through September 30, 2021.
The Department of Labor has until April 10th, 2021 to clarify the language of the law, such as the definition of “involuntarily terminated,” but there are certain actions which you, the employer, can take now to ensure your continued COBRA compliance. The purpose of this letter is to outline what we are working on and what we believe you, the employer needs to be doing to ensure your ongoing COBRA compliance.
HRPro’s Action Plan
As an employer, it is important that you identify who is and is not eligible for the subsidy. We will be sending all clients a report from our system known as the Qualifying Event Tracking Report by Type which will assist you in this process.
Employers will be required to:
Identify from the report which of these individuals were involuntarily terminated or had a reduction of hours and as such, may be considered Assistance Eligible Individuals (AEIs).
Determine whether you intend to allow a former employee to switch to alternative health coverage for COBRA purposes. If you offer more than one health plan to employees, would you be willing to offer AEIs the option to select the lower cost option if available?
If you currently pay some portion of COBRA premiums for certain qualifying individuals, the amount of the subsidy for which these participants are eligible will need to be carefully reviewed.
HRPro will take the following actions to ensure your COBRA compliance:
There is much work to be done in a short period of time. Be assured that we are doing everything we can to be prepared for the finalized guidance from the DOL and Treasury on 4/10/2021. We will be watching for these model notices and any technical changes to the Act that may arise. If you have any questions, please do not hesitate to contact us.