Important: To opt into the provisions described below, please complete the American Rescue Plan Act (ARPA) COBRA Questions and Options form by April 30, 2021.
General Information about the American Rescue Plan Act
The American Rescue Plan Act (“ARPA”) was signed into law on March 11, 2021. This COVID-19 relief bill contained two specific provisions related to COBRA:
- A 100% subsidy of COBRA premiums for Assistance Eligible Individuals from April 1, 2021 through September 20, 2021 (required for employers whose benefit plans are subject to COBRA)
- A provision allowing Assistance Eligible Individuals to change to a different health plan (this is an optional provision that employers are not required to adopt)
Overview of the COBRA Subsidy
- This subsidy would cover 100% of the cost of COBRA for Assistance Eligible Individuals (excluding Health FSAs) from April 2021 through September 2021 (or through the end of COBRA, if earlier).
- Premiums that can be subsidized include medical, dental, vision and EAP plan premiums. Premiums for Health and Limited Purpose FSAs are not part of the subsidy.
- An Assistance Eligible Individual (AEI) is someone who(se):
- Experienced a COBRA Qualifying Event of either involuntary termination or reduction in hours
- COBRA coverage (typically 18 months) carries into April 2021, including:
- Individuals currently enrolled in COBRA
- Individuals who declined COBRA, but had they elected their coverage time period would have carried into April 2021
- Individuals who initially enrolled in COBRA, subsequently dropped COBRA coverage, but had they remained enrolled their coverage time period would have carried into April 2021
- Is not eligible for other group health coverage or Medicare
- AEIs who qualify for the subsidy and who return the Special Notice paperwork back to Sentinel will not have to pay premiums between April 1, 2021 and September 30, 2021. The monthly COBRA premium for all benefits for these months will be $0, with the exception of continuation coverage for Health Flexible Spending Accounts which falls outside the scope of this subsidy.
- Unlike typical COBRA, AEIs do not have to elect coverage back to the date that they lost coverage under your plan. Instead, an AEI can elect coverage effective April 1, 2021. However, as a result of EBSA Disaster Relief Notice 2021-01, many individuals will have the opportunity to either elect coverage back to the date that coverage under your plan was lost (and premiums for amounts prior to April 1, 2021 would be required) or effective April 1, 2021.
- Even though AEIs have the opportunity to elect coverage effective April 1, 2021, in no case does this subsidy extend COBRA coverage for more than the time allowed due to the Qualifying Event. The clock for the number of months of coverage (typically 18) will still begin on the original COBRA start date, even if the AEI elects coverage effective April 1, 2021.
- Unlike open enrollment, AEIs are not allowed to add plans that they did not have at the time coverage was lost and/or add family members who were not on the plan(s) at the time coverage was lost.
- An employer whose plans are subject to COBRA must offer this subsidy. There is no employer opt-out.
Overview of the Medical Plan Change Option
- Employers may also allow AEIs to elect a different medical plan at the time that the subsidy is offered.
- If offered, AEIs can only select a medical plan that is less expensive than the plan that they had when coverage was lost.
- This provision is optional, and is only applicable to the medical plan.
ARPA’s Notification Requirements
- ARPA requires that AEIs who are eligible for the subsidy on April 1, 2021 must receive a Special Notice notifying them of the subsidy by no later than May 31, 2021. If your organization provides Sentinel with the appropriate information, we will fulfill the requirement on your organization’s behalf. If your organization also allows the medical plan change option, this provision will be included in the Special Notice mailing. For those AEIs eligible after April 1, 2021, the Special Notice language will be included with the COBRA Qualifying Event paperwork.
- An AEI has 60 days from receipt of the Special Notice to elect coverage/send back confirmation that they are eligible for the subsidy. A component of receiving the subsidy is the AEI attesting that they are not eligible for other group health coverage or Medicare. Only once this attestation is provided to Sentinel will we apply the $0 premium (and reinstate coverage, if applicable).
- ARPA also requires that AEIs are notified of the expiration of the subsidy no later than 15 days prior to the subsidy end date. Sentinel will also fulfil this requirement on your organization’s behalf.
What Sentinel Needs to Move Forward with the Special Notice Mailing
- Identification of involuntary terminations from November 2019 to present. While Sentinel knows which COBRA-eligible individuals experienced a Termination event, we do not always receive an indicator of voluntary versus involuntary termination. The subsidy offering need only be made available to those who experienced an involuntary termination, so we will need your assistance in identifying which terminations are voluntary versus involuntary.
- Information as to how we should handle dropped plans. If you changed medical, dental, and/or vision plans in 2020 or 2021, it’s possible that an AEI will be eligible for a plan that you no longer offer. To account for this issue, we’re asking that you provide a mapping of any plan you no longer offer to one that you currently offer under your suite of benefits.
- Decision as to whether you will also allow AEIs to change medical plans. As noted above, this is not a requirement and thus your organization can opt in or out of this provision.