On Thursday March 11, 2021, the American Rescue Plan Act of 2021 (ARPA) was signed into law. ARPA is a wide ranging Act, however one purpose of the legislation is to provide additional COVID-19 relief to individuals who have been impacted by the pandemic. One of the provisions in ARPA provides for COBRA premium subsidies for Assistance Eligible Individuals (AEIs). AEIs are Qualified Beneficiaries (QBs) who are eligible for COBRA coverage due to an involuntary termination or reduction in hours. AEIs could be QBs who lost health coverage as far back as October 2019. The subsidy would begin on April 1, 2021 and last through September 30, 2021. ARPA provides that the subsidy would be 100% of the COBRA premiums for AEIs and the Employer would be responsible for the subsidy. The Employer would take a credit against their Medicare payroll tax to be reimbursed for the subsidy.
A special notice to eligible individuals must go out within 60 days from April 1st. The Department of Labor (DOL) must issue the model notices within 30 days of enactment which would be sometime in April. We are committed to working with our clients, agents, and brokers to navigate through and maintain compliance with the regulatory changes and requirements. We and other professionals across the country anticipate additional guidance to be released in the coming weeks and this will allow DBS to provide more information to our clients, agents, and brokers directly.
Diversified Benefit Services, Inc. (DBS) understands that there are many questions related to ARPA and the COBRA subsidies. We are reaching out to agencies, the ECFC association and legal counsel as well as continuing to monitor additional agency guidance on these topics. Internally, DBS is allocating responsibilities by planning and organizing so that once the agency guidance is released, we can efficiently and effectively communicate with impacted individuals.
What can Employers do at this time?
Employers can begin the process of identifying involuntary terminations and reductions in hours that caused a loss of benefit eligibility within the preceding 18 months (going back to October 2019). With respect to terminated individuals, at this time, ARPA identifies individuals who experienced an involuntary termination as potentially eligible for the COBRA subsidy. There are questions as to how to define involuntary termination; therefore, employers may want to consider creating a list of all terminated employees and subcategorize those terminations by identifying individuals who clearly experienced an involuntary termination versus “other” termination reasons. Once additional guidance is provided by the agencies, employers can then refine those lists of Qualified Beneficiaries (QBs). DBS COBRA Specialists will assist clients with generating lists of QBs. Clients can compare that list with their internal records to ensure all affected QBs have been identified.