Author: Brian Lowell, Risk Manager, ACBI Insurance
The Latest bill addressing the ongoing economic impact of the COVID-19 Pandemic the American Rescue Plan Act (ARPA) has been signed by President Biden on March 11, 2021. Under this new legislation, there is a provision to provide a 100% Subsidy of premiums for COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986) and similar state continuation of coverage (mini-COBRA) for employer-sponsored group health insurance.
The ARPA subsidies cover the full cost (100% of premiums) of COBRA (or mini-COBRA) for the 6-month period from April 1, 2021 through September 30, 2021 for employees and their qualifying family members. The qualifier – the employee must have lost or loses group health insurance due to involuntary job loss or involuntary reduction in work hours, defined as Assistance Eligible Individuals (AEIs).
The subsidy does not apply to:
- Individuals who are eligible for another group health plan or Medicare, OR
- Individuals whose job loss was voluntary or the result of gross misconduct
If an individual receives a COBRA subsidy and becomes eligible for another plan or Medicare and does not inform the health plan, there is a penalty.
Employer Responsibility
Under the subsidy provision individuals are not allowed to claim the subsidy, resulting in the cost of the COBRA premium having to be paid by the employer for the period of the credit. To offset the expense of paying these premiums, employers with both self-funded and insured plans will apply for a tax credit quarterly through a reduction of Medicare payroll taxes (according to forms and instructions to be provided by federal agencies). It can be advanced and is fully refundable.
Employers should accrue a list of all employees (with their qualifying event date) who have been involuntary terminated, or hours reduced, going back to the timeframes outlined below:
| Benefit | Start Date for Reporting Qualifiers |
| Fully Insured Medical | CT – 11/1/2018 Other States Vary based on Mini-COBRA rules (state continuation) |
| Self/Level Funded Medical | 11/1/2019 |
| Dental | 11/1/2019 |
| Vision | 11/1/2019 |
If you have a COBRA administrator, send them this list as they should be handling all communication/ notification with anyone who qualifies for the COBRA Subsidy. The ARPA imposes new COBRA notice requirements on Plan Administrators to provide notification of these new benefits. Per the legislation, the DOL has until April 10 to issue the new model notice for distribution.
If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.
