Expiration of COBRA Subsidy Allowed under ARPA

 

ARPA COBRA Summary

As part of the American Rescue Plan Act (ARPA), signed by President Biden on March 11, 2021, qualified COBRA participants were provided temporary premium assistance through a subsidy allowed under the Act.  Qualified COBRA participants eligible for the premium subsidy were individuals who:

  • were involuntarily separated from employment or
  • had a reduction in hours that resulted in a loss of coverage; and,
  • were not eligible under another group health plan or Medicare and elected to enroll in COBRA.

 

These individuals were known as “Assistance Eligible Individuals” or AEIs and were not required to pay for COBRA premiums during the period allowed of April 1, 2021, through September 30, 2021. In August 2021, notices were sent to qualifying individuals informing them that the premium assistance credit would end as of September 30, 2021.

 

In lieu of the COBRA participant paying the premium, the employer or plan holder paid the premium to the insurance carrier and was then reimbursed for the premium by the Federal government.  To receive the reimbursement of premium, employers who paid for a COBRA participant’s group health plan premium from April through September 2021 were instructed to apply for the premium assistance credit on Form 941, the Employer’s Quarterly Federal Tax Return.  For both quarters, employers were to report the amount of the  credit and the number of individuals receiving the subsidy.

 

Expiration of the ARPA COBRA Subsidy

Because the temporary premium assistance offering has expired, P&A is no longer required to send the model ARP General Notice and COBRA Continuation Coverage Election notice to qualifying individuals.  We have reverted to the former model Election Notice, which does not contain the attestation form for individuals to state they are assistance eligible.  We will, however, continue to include the Outbreak insert, informing qualifying individuals of the one-year tolling period.

 

What is the Tolling Period?

The IRS Notice 2021-58 published on October 6, 2021, explained that the one-year period to make a COBRA election and then to pay the initial payment runs concurrently, not consecutively.  This is how the Notice 2021-58 explains the tolling period:

  • If an individual elected COBRA continuation coverage outside of the initial 60-day COBRA election timeframe, that individual generally will have one year and 105 days after the date the COBRA notice was provided to make the initial COBRA premium payment.
  • If an individual elected COBRA continuation coverage within the initial 60-day COBRA election timeframe, that individual generally will have one year and 45 days after the date of the COBRA election to make the initial COBRA premium payment.

For exceptions to the above rule, please see IRS Notice 2021-58 for further clarification.

 

P&A COBRA Customer Support

If you are an existing client and have questions about your company’s plan(s), please contact your Account Manager.  If you are interested in learning more about P&A’s COBRA administration services, please click here.  If you are a COBRA continuant and have questions about your personal election, please contact P&A’s Participant Support Center Monday – Friday, 8:30 a.m. – 10:00 p.m. ET through online chat or (716) 852-2611.