COBRA Subsidy Provisions of The ARPA
The American Rescue Plan Act (ARPA), was signed into law on March 11, 2021. A primary purpose of the law was to provide financial assistance with obtaining or retaining health insurance. To that end, ARPA provides a 100% subsidy of COBRA premiums for six-months. For smaller employers who fall under the COBRA threshold, ARPA requires employers to pay 100% of state continuation coverage, also known as mini-COBRA.
ARPA subsidies cover the full cost of COBRA and mini-COBRA premiums from April 1, 2021 through September 30, 2021 if the employee lost or loses group health insurance due to an involuntary job loss or reduction of work hours.
The subsidy applies to:
- A qualified beneficiary of the group health plan and their spouse/dependents.
- Employees who are eligible for COBRA or mini-COBRA continuation coverage because of the covered employee’s involuntary termination (unrelated to gross misconduct) or reduction in hours of employment.
The subsidy does not apply to:
- Individuals whose job loss was voluntary or the result of gross misconduct.
- Individuals who are eligible for another group health plan or Medicare.
What do Employers need to do?
If you retain the services of a Third Party Administrator such as BeneFlex, you will not need to do anything except assist in the gathering of data if and when requested.
If you do not retain the services of a Third Party Administrator you will be required to provide new notices about the subsidy to any former employee(s) who experienced an involuntary termination or a reduction in hours since November 1, 2019.
Many aspects of ARPA are still evolving. Towne Benefits and BeneFlex will continue to monitor the law and relay pertinent information as the implementation of the law advances.
Filed Under: Benefits Briefs