Under the American Rescue Plan Act of 2021
In our continued efforts to keep StayWell Members informed regarding new legislation that impacts certain group health plans, we have aggregated the following information to assist plan administrators remain in compliance with directives provided by the federal government. The American Rescue Plan Act of 2021 (ARP), signed by President Biden on March 11, 2021, includes provisions meant to assist those impacted by the COVID-19 pandemic. Amongst these provisions is COBRA Premium Assistance which subsidizes health insurance premiums for qualified individuals via tax credit to the employer.
What You Need to Know
- Employer sponsored group health plans offered by companies with 20 or more employees in the prior year are required by COBRA to offer a temporary extension of health coverage called COBRA Continuation Coverage in the case of a reduction of hours, or involuntary termination of employment.
- Premium Assistance applies to coverage beginning April 1, 2021 through September 30, 2021.
- Employers will be responsible for paying health insurance premiums on behalf of qualified individuals.
- Employers are entitled to a tax credit for the amount of the premium assistance.
- As the employer/health plan administrator you will be required to provide notice to qualified individuals.
- As the employer/health plan administrator you will be given until May 31, 2021 to provide notice to qualified beneficiaries.
- Individuals who qualified for COBRA between November 1, 2019 to April 1, 2021 may be eligible for premium assistance through an Additional Election Opportunity.
Note for Employers: If your credit exceeds the amount of payroll taxes due, you will receive a refund by submitting Form 941.
COBRA Continuation Coverage
COBRA Continuation coverage provides certain group health plan continuation coverage rights for participants and beneficiaries covered by a group health plan. The premium assistance applies to periods of health coverage on or after April 1, 2021 through September 30, 2021.
An employer or plan to whom COBRA premiums are payable is entitled to a tax credit for the amount of the premium assistance.
Who are Assistance Eligible Individuals?
To be eligible for COBRA Premium Assistance, an individual must:
- Have a COBRA qualifying event (that is a reduction in hours or an involuntary termination of a covered employee’s employment).
- Elect COBRA continuation coverage.
- NOT be eligible for Medicare AND
- NOT be eligible for coverage under any other group health plan, such as a plan sponsored by a new employer or a spouse’s employer.
Additional Election Opportunity
Generally, qualified beneficiaries whose COBRA qualifying event took place between November 1, 2019 through April 1, 2021 may be eligible to apply for COBRA Continuation Coverage through an Additional Election Opportunity if:
- The individual did not elect COBRA continuation when it was first offered.
- The individual elected COBRA continuation coverage but is no longer enrolled (for example, an individual who dropped COBRA because they were unable to continue paying the premium).
Notices to Qualified Beneficiaries
Employers will be required to provide notice to qualified individuals:
- A general notice to all qualified beneficiaries must be sent by the employer no later than May 31, 2021. This notice may be provided separately or with the COBRA election notice following a COBRA qualifying event.
- A notice of the extended COBRA election period to any Assistance Eligible Individual (or any individual who would be an Assistance Eligible Individual if a COBRA continuation coverage election were in effect) who had a qualifying event before April 1, 2021. This requirement does not include those individuals whose maximum COBRA continuation coverage period, would have ended before April 1, 2021.
Notices must contain the following:
- Eligibility Forms;
- Plan Administrator Contact Information;
- Eligibility information;
- Additional election period information (if applicable to the individual); and
- Other coverage options if offered by the Employer.
Furthermore, employers and plan administrators can find more information and answers to frequently asked questions regarding COBRA Premium Assistance at the following links: Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021