As companies of all types and sizes continue to deal with the potential legal implications of the COVID-19 pandemic for their businesses, Jackson Walker provides insights and resources on the COVID-19 Legal Resources & Insights site.
By Greta Cowart
The Model COBRA Subsidy forms mandated under the American Rescue Plan Act (ARPA) were released today ahead of the deadline. There are four new model forms and an alternative form to one of the model forms. The Employee Benefits Security Administration (EBSA) issued the forms with sets of FAQs for employers, workers, and their families.
The FAQs for employers clarify that the COBRA Subsidy under ARPA applies to both federal COBRA as well as comparable state mandated continuation coverage (“Mini-COBRA”), so small employers with insured health plans that are exempt from federal COBRA continuation coverage may provide the premium assistance for Mini-COBRA from April 1, 2021 to September 31, 2021.
The FAQs issued by EBSA clarify that the premium assistance under ARPA applies to employer-sponsored plans, union-sponsored plans, and to group health plans sponsored by state or local governments that are subject to continuation coverage under the Public Health Service Act in addition to the Mini-COBRA plans.
The FAQs remind that the loss of coverage is due to an involuntary termination or employment or reduction in hours, whether it be for change from full- to part-time status, taking a temporary leave, or participation in a lawful labor strike (as long as the employee remains employed).
The Model Notices provided can be used by employers to meet the requirement to current group health plan participants terminating employment between April 1, 2021, and September 1, 2021. While there are a number of extended time periods under various guidance related to the national emergency related to the pandemic, the FAQs clarify that such extended deadlines do not apply to extend the notice or election periods related to ARPA’s COBRA Subsidy. The excise tax for providing late notices for ARPA’s COBRA Subsidy are up to $100 per person and up to $200 per family. This also means that the eligible individuals must still elect the subsidized COBRA Coverage within 60 days of receipt of the new notices and if such deadline is missed, the eligible individual forfeits all rights to elect COBRA coverage with the COBRA Subsidy. Employers should consider sending these notices in a manner that provides for proof of the delivery date to have a record of the date on which the election period begins and ends.
The Model Notices include the Model Notice in Connection with Extended Election Period, which is used to notify eligible individuals (who lost coverage on or after October 1, 2019) who are eligible for the ARPA COBRA Subsidy who were previously offered COBRA continuation coverage, but who had not elected coverage or had not continued making premium payments of their ability to elect the COBRA coverage during the premium subsidy period.
While the Model Notices are available, they are not mandated and can be modified. There may be good reasons for an employer to consider modifying the notices. If an employer chooses to draft their own forms or modify the model forms, the FAQs specify what information must be included in the notices.
The FAQs make it clear that the individuals eligible for the ARPA Cobra Subsidy are not required to pay the administrative fee (the additional 2% on top of the premium). The FAQs also make it clear that the plans or insurers are not to collect premiums for coverage between April 1, 2021, and September 30, 2021, and require the eligible individual to seek recovery of the premium.
If an individual eligible for the ARPA COBRA Subsidy has already paid a COBRA premium for April 2021 (or any other month in the ARPA COBRA Subsidy period), the FAQs instruct the individual to contact the plan administrator or employer to discuss a credit against future premium payments (presumably after the subsidy period, if the individual’s maximum period of coverage extends past the subsidy period) or a refund. An employer can decide which method it will adopt to handle mistaken premium payments.
Employers can decide if they will permit any qualified beneficiary to change their medical coverage election at the time of the qualifying event. If an individual eligible for the ARPA COBRA Subsidy chooses to use the option to change medical options for the COBRA period, that will not impact his or her eligibility for the ARPA COBRA Subsidy. Employers are not required to permit any qualified beneficiary to change the medical option at the time of a qualifying event.
Individuals eligible for the ARPA COBRA Subsidy may qualify for a special enrollment period at the end of the subsidy period to enroll in individual coverage.
Additional Insights on the American Rescue Plan Act:
- How the American Rescue Plan Act Affects COBRA Health Coverage »
- American Rescue Plan Act and the COBRA Subsidy – Déjà Vu All Over Again »
- American Rescue Plan Act and Changes to Dependent Care »
- Multiemployer Pension Plan Changes in the American Rescue Plan Act »
- JW Coronavirus Insights & Resources microsite »
- COVID-19 & Your Business: Frequent Questions »
- JW Fast Takes Podcasts & Webinars »
- Sign Up for JW eAlerts »
Please note: This article and any resources presented on the JW Coronavirus Insights & Resources site are for informational purposes only, do not constitute legal or medical advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Jackson Walker. The facts and results of each case will vary, and no particular result can be guaranteed.