On Thursday, March 11, President Biden signed the American Rescue Plan Act (ARPA) of 2021. Among other features, ARPA provides full COBRA subsidies under specific circumstances and creates significant additional COBRA enrollment eligibility.ARPA SubsidiesARPA establishes a 100% COBRA premium subsidy for Assistance Eligible Individuals (AEI) for the period April 1, 2021, through September 30, 2021.AEIs are Qualified Beneficiaries (QBs) who: - Are eligible for COBRA coverage due to Involuntary Termination or Reduction of Hours
- Elect COBRA for some period within the ARPA Subsidy window
AEIs include: - QBs who are eligible for COBRA and enroll for coverage on or after April 1, 2021
- QBs who elected COBRA previously and remain enrolled as of April 1
- QBs who were previously eligible for COBRA, did not elect at that time but are still within their 18-month maximum coverage period, and enroll during the special enrollment period created by ARPA that begins April 1 (see below)
- QBs who previously elected COBRA, discontinued coverage or allowed it to lapse but are still within their 18-month maximum coverage period, and enroll now during the special enrollment period
In other words, AEIs can include QBs who lost their health coverage as long ago as November 2019, since the 18-month maximum coverage period for a QE on that date does not expire until the end of April 2021. The employer (or insurance carrier, in some cases) will pay 100% of the COBRA premiums for AEIs for the April 1-September 30, 2021 period. The Federal government will reimburse the employer (or carrier) through a refundable credit against FICA taxes.COBRA Enrollment PeriodARPA creates a special enrollment period for AEIs that extends from April 1, 2021, until 60 days after the date on which the AEI received written notification of eligibility to elect coverage during the special enrollment period.Whether newly qualified, previously eligible but did not elect at the time, or previously elected but later discontinued coverage, AEIs not enrolled in COBRA as of April 1 can elect coverage during a special enrollment period that begins April 1 and ends 60 days after the date on which the AEI received written notification of the special enrollment period.
AEIs who elect COBRA during the special enrollment period do not have to pay “back premiums” to bring coverage up to date. As a result, they receive no coverage for the prior, non-enrolled period. Their coverage begins on enrollment (April 1 or later) and the ARPA Subsidy pays the premiums for it until either September 30, 2021, or coverage ends, whichever comes first.
Electing non-continuous COBRA during the special enrollment period does not affect the timeline of the AEI’s 18-month maximum coverage eligibility, which tolls from the original QE date.
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Last Modified:3/30/2021 7:45:09 AM
Last Modified By: Kevin_Murphy
Type: INFO
Level: Intermediate
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