The American Rescue Plan Act of 2021 (ARPA) COBRA premium assistance provisions take effect on April 1, 2021.  Even small employers who are usually exempt from federal COBRA regulations may have to comply with the ARPA COBRA premium assistance as State continuation coverage that is comparable to Federal COBRA is included.

Premium Assistance

An “Assistance Eligible Individual” does not owe any part of the COBRA premium for the period of coverage starting April 1, 2021, and ending September 30, 2021.  This includes individuals enrolled in continuation coverage as of April 1 and those who enroll in continuation coverage on or after April 1.  The premium assistance is not available for premiums required to continue participation in a Health Flexible Spending Arrangement (FSA).

An Assistance Eligible Individual (AEI) is a Qualified Beneficiary who is eligible for and elected continuation coverage by reason of an Involuntary Termination or Reduction in Hours qualifying event.  

An AEI’s period of premium assistance may expire early for periods of coverage beginning on or after the earlier of:

  • First date individual is eligible for additional coverage under another group health plan (other than coverage consisting of only excepted benefits, including Health FSA plans), a Qualified Small Employer Group Health Reimbursement Arrangement (QSEHRA), or Medicare benefits; or
  • The date following the expiration of the maximum period of continuation coverage required under the applicable COBRA continuation coverage provision. 

Special Election Period Extension

An individual who is not enrolled in continuation coverage on April 1 but would be an AEI if an election were in effect will have a new opportunity to elect coverage as of April 1.  This includes individuals who did not originally elect continuation coverage or elected but discontinued coverage prior to April 1, 2021 (called the Lookback Period).  For AEIs who elect coverage during their Special Election Period Extension, coverage will start on April 1, 2021, and will not extend beyond the period of COBRA that would have been required if the coverage had been elected or had not been discontinued.

An AEI’s Special Election Period Extension begins on April 1 and ends 60 days after the group health plan furnishes the Notice of Extended Election Period.

Plan Enrollment Option

If the employer allows, an AEI may elect to enroll in coverage that is different than coverage in which the individual was enrolled at the time of his/her Qualifying Event.  The premium for the different coverage may not exceed the premium for coverage in which such individual was enrolled at the time such qualifying event occurred, and the employer must offer the different coverage to similarly situated active employees at the time at which such election is made.  Finally, the AEI must elect the different coverage within 90 days of receiving the Plan Enrollment Option Notice.

The Plan Enrollment Option does not apply to Excepted Benefits coverage (i.e., Dental Only, Vision Only), a QSEHRA, or a Health Flexible Spending Arrangement.

Required Notice to Individuals

Plan Administrators must modify COBRA Notices to include information on the available premium assistance and the alternate enrollment plan option, if applicable.  Also, Plan Administrators must notify individuals who may be an AEI if an election were in effect as of April 1, 2021, of the Special Election Period Extension no later than May 31, 2021.  With respect to any AEI, a Plan Administrator's COBRA notice requirement shall not be considered as met unless COBRA notices include this additional information in clear and understandable language.  The requirement may be met by amending the existing COBRA notice or including a separate notice.

Plan Administrators are also required to furnish an Expiration of Premium Assistance Notice to AEIs no later than 15 days prior to the subsidy expiration date and no sooner than 45 days prior to the subsidy expiration date.  With respect to any AEI, the Plan Administrator's COBRA notice requirement shall not be considered as met until the Notice of Expiration of Premium Assistance Period is furnished to the individual. However, the Expiration of Premium Assistance Notice requirement is waived if an AEI's period of subsidy expires early due to their eligibility for Group Health Coverage, a QSEHRA, or Medicare.

Model Notices

The Department of Labor (DOL) will provide necessary Model Notices for Plan Administrators’ use.  The DOL will provide Premium Subsidy Availability, Alternate Plan Enrollment Option, and Extended Election Period Model Notices no later than April 11.  The DOL will provide Expiration of Premium Assistance Period Notice no later than April 26. 

How PrimePay can help.

The premium assistance available under the ARPA is complex and brings new administrative burdens.  PrimePay is actively developing solutions to assist our COBRA and State Continuation clients.

For current PrimePay clients, your Benefit Services team will share more details of the changes and timeline in the coming weeks.

PrimePay’s COBRA solution.

PrimePay provides administration of all COBRA qualified plans. That means you can avoid costly penalties and excise taxes ($100 or more a day per violation) from COBRA audits. Fill out the form below to get in contact with a PrimePay representative:

Disclaimer: Please note that this is not all-inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding the specific application of the information to your own plan.