American Rescue Plan Act of 2021 and COBRA premium assistance
On March 11, President Biden signed the American Rescue Plan Act of 2021 (“ARPA”) into law. Among its many provisions, the ARPA provides full COBRA premium assistance for eligible individuals from April 1, 2021 through September 30, 2021. The departments responsible for enforcement of the ARPA have not yet issued guidance, but as we read the law it provides the following:
- In order to qualify for COBRA premium assistance, an individual must have been eligible for COBRA due to involuntary termination (for reasons other than gross misconduct) or a reduction in hours.
- This includes individuals who were eligible but either did not elect COBRA coverage or let their COBRA coverage lapse. If these individuals now choose to elect COBRA, coverage and premium assistance will begin on or after April 1, 2021.
- The ARPA does not extend COBRA coverage beyond the time period applicable to the original qualifying event.
- Employers may choose to allow eligible individuals to switch from one health plan to another, provided the new coverage is less expensive than the coverage in which the individual was enrolled at the time of the qualifying event.
- An individual who is or becomes eligible for other group health coverage or Medicare must notify their employer and is no longer eligible for the COBRA premium assistance.
Premium assistance election notices
- Employers will need to send a notice to each individual who lost coverage because of an involuntary termination or a reduction in hours on or after November 1, 2019.
- These notices must be provided within 60 days of April 1, 2021.
- If your group has signed up for MESSA’s COBRA services, MESSA will send these election notices for you.
Premium assistance ending notice
- Employers must provide notice when the premium assistance expiration date is approaching as well as notice that the individual may be eligible to continue COBRA without the premium assistance.
- Notice must be provided between 45 days before such expiration and ending 15 days before the expiration date.
- If your group has signed up for MESSA’s COBRA services, MESSA will send these election notices for you.
Employer tax credit
- Employers will be responsible for these COBRA premiums and will recover the cost of the coverage by claiming a credit against its quarterly Medicare payroll tax liability.
If you have any questions, contact MESSA Group Services at 888.888.4167.