ARPA and COBRA Subsidies. What All Employers Need to Know
The American Rescue Plan Act (ARPA) established a 100% COBRA premium subsidy for assistance eligible individuals (AEI) for the period April 1st, 2021 through September 30th, 2021.
Who are AEI qualified beneficiaries?
AEI’s are qualified beneficiaries (QB) who:
- Are eligible for cobra coverage due to involuntary termination or reduction of hours
- Elect COBRA for some period within the (ARPA) subsidy window
What does AEI include?
AEI’s include:
- QB’s who are eligible for COBRA enroll for coverage on or after April 1st
- QB’s who elected COBRA previously and remained enrolled as of April 1st
- QB’s who were previously eligible for COBRA and did not elect at that time but are still within their 18 months maximum coverage period and enroll during the special enrollment period created by ARPA that begins April 1st
- QB’s who previously elected COBRA discontinued coverage or allowed it to lapse but are still within their 18 months maximum coverage period and enrolled now during the special enrollment period
In other words, assistance eligible individuals – AEI’s – can include QB’s who lost their health coverage as long ago as November 2019 since the 18 months maximum coverage period for a qualifying event on that date does not expire until the end of April 2020.
The employer (or insurance carrier in some cases) will pay 100% of the COBRA premiums for AEI’s from April 1st through September 30th, 2021. The federal government will reimburse the employer or carrier through a refundable credit against FICA taxes.
COBRA ENROLLMENT PERIOD
ARPA creates a special enrollment period for AEI’s that extends from April 1st, 2021 until 60 days after the date on which the AEI received written notification of eligibility to elect coverage during the special enrollment period.
Whether newly qualified, previously eligible but did not elect at the time, or previously elected but later discontinued coverage, AEI’s not enrolled in COBRA as of April 1st can elect coverage during a special enrollment period that begins April 1st and ends 60 days after the date on which the AEI received written notification of the special enrollment period.
AEI’s who elect COBRA during the special enrollment period do not have to pay back premiums to bring coverage up to date. As a result, they received no coverage for the prior, non-enrolled period. Their coverage begins on enrollment April 1st or later and the ARPA subsidy pays the premiums for it until either September 30th 2021 or coverage ends, whichever comes first.
Electing non-continuous COBRA during the special enrollment period does not affect the timeline of the AEI’s 18-month maximum coverage eligibility, which tolls from the original qualifying event date.
WHAT VANTAGEPOINT IS DOING FOR YOU
Vantagepoint has been capable of administering subsidies since 2009 when we added functionality to address partial COBRA subsidies under the American Recovery and Reinvestment Act.
Subsidy tracking is fully functional in our system and we are ready to add them for each employer.
APRIL 2021- WE ARE WAITING ON THE DOL
The US Department of Labor must issue a new model ARPA subsidy availability/election, and ARPA subsidy expiration notices.
As soon as these are available, we will begin the process to integrate them into our system.
MID-MAY 2021
By mid-May these new model notices will be ready for customization and release
We will also have revised reporting functions to assist in documenting these subsidies so employers can obtain their credit
We continue to consult with industry legal and compliance experts in pursuit of guidance and clarification on all the ARPA requirements. We will continue to provide updates as more is known.
If you are administering COBRA in-house or are not confident in the abilities of your COBRA administrator, please let us know as the time might be right to outsource this complicated and risky obligation to VantagePoint.