Understanding The COBRA Provisions Of The American Rescue Plan Act Of 2021 (ARPA)

By Steph Breunig, HR Practice Leader

What is it?

Under the ARPA, “Assistance Eligible Individuals” may elect to continue employment-based group health plan coverage for up to 5 months – from April 1, 2021 through September 30, 2021 – without paying COBRA premiums. Employers or plan issuers must pay premiums on behalf of such individuals and will be reimbursed through a COBRA premium assistance tax credit.

Who is Impacted?

To be an “Assistance Eligible Individual” under the ARPA, an individual must meet all of the following requirements:

• MUST have a COBRA qualifying event that is a reduction of hours or an involuntary termination of employment (NOT including a voluntary termination or a termination for gross misconduct);
• MUST elect COBRA continuation coverage;
• MUST NOT be eligible for Medicare; and
• MUST NOT be eligible for coverage under any other group health plans, such as a plan sponsored by a new employer or a spouse’s employer.

Important Dates

COBRA premium assistance is available for periods of coverage from April 1, 2021 through September 30, 2021. Assistance will end earlier if an individual:

• Reaches the end of their maximum 18-month COBRA continuation period; OR  
• Becomes eligible for Medicare or other group health plan coverage (including from a new employer).

Notice Requirements

Employers and other plan issuers must notify qualified beneficiaries about COBRA premium assistance and other rights as follows:

• For all qualified beneficiaries who have a qualifying event between April 1, 2021 and September 30, 2021, provide a Summary of COBRA Premium Assistance Provisions and ARPA General Notice or an alternative notice for plans covered by state laws. These notices should be provided in accordance with existing requirements for manner and timing of COBRA notices.
• For any qualified beneficiary who had a qualifying event before April 1, 2021, provide a Summary of COBRA Premium Assistance Provisions and Notice of Extended COBRA election period. This notice must be provided by May 31, 2021. This additional election period does not extend the period of COBRA continuation coverage beyond the original maximum period had COBRA been elected at the time of the qualifying event.
• Eligible individuals have 60 days after receipt of the applicable COBRA notice to elect COBRA continuation coverage with premium assistance.
• Employers and plan issuers are also required to provide Assistance Eligible Individuals with a Notice of Expiration of Period of Premium Assistance 15-45 days before the recipient’s premium assistance expires.

Additional Election Opportunities

The ARPA provides additional COBRA election opportunities under certain circumstances:

• Group health plans may (but are not required to) offer Assistance Eligible Individuals the option to choose coverage different from that which they had at the time of the COBRA qualifying event, subject to certain restrictions and additional notice requirements.
• If a family member of an Assistance Eligible Individual did not initially elect COBRA continuation at the time of a qualifying event, they have an additional opportunity to enroll with premium assistance. This will not extend the period of COBRA continuation coverage beyond the original maximum period.  

This summary of ARPA’s COBRA premium assistance provisions is not intended to provide an exhaustive analysis of the law, but Fine Point Consulting HR is ready to help you navigate the new requirements. Employers should also work closely with their group health plan providers to ensure complete compliance with COBRA notice and coverage provisions. Please contact us at hr@finepointconsulting.net for this and other HR needs.

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