COBRA

Extension of Time Period to Elect Coverage & Pay Premiums 

On April 29, 2020, the Department of Labor, along with the Department of the Treasury, issued a notice that affects COBRA participants in response to the impact of coronavirus pandemic. Under this guidance, certain deadlines have been extended, including allowing participants additional time to enroll in group health coverage and pay for COBRA benefits until the end of the “Outbreak Period.”

This period expired February 28, 2021.  Prior to its expiration, the Department of Labor issued EBSA Disaster Relief Notice 2021-01.  In the notice, the Department of Labor states that the one-year period of relief will continue for an individual on a case by case basis.  To clarify, the one year period of relief will continue for an individual through the earlier of one year from the date the individual was first eligible for relief or the end of the Outbreak Period.  The maximum period this extension is available for an individual will not exceed one year. 

American Rescue Plan Act of 2021

On March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA) of 2021, which contains the following COBRA provisions:

COBRA Subsidy 

Employers will obtain the subsidy to pay for the individual's COBRA premium through a payroll tax credit.  

  1. The subsidy will become effective from April 1, 2021 - September 30, 2021.  
  2. The subsidy will end earlier than September 30 if an individual becomes eligible for another group health plan or Medicare, or if the individual's normal COBRA expiration occurs before September 30. 
  3. Eligible individuals who have not yet elected COBRA can make an election during the Extended Election Period if they have not already elected COBRA.  This is known as the "lookback period."

Eligibility 

In order to be eligible for the subsidy, an individual must be deemed as an Assistance Eligible Individual (AEI).  To be considered an AEI, the individual must meet the following guidelines:

  1. The individual lost coverage due to an involuntary termination or a reduction in hours.
  2. The individual must be eligible for COBRA as of April 1, 2021. 
  3. Eligible individuals who have elected COBRA as of April 1, 2021, can take advantage of the subsidy beginning April 1, 2021.
  4. Eligible individuals who become eligible for COBRA on or after April 1, 2021, will be eligible for the duration of the subsidy. 

Next Steps

Under the ARPA, employers can offer laid-off workers the option to enroll in a different group health plan.  The Act requires employers to provide updated notices to affected individuals.  

We realize these changes may be challenging to groups, and we are prepared to guide you through the complex process just like we did during the ARRA legislation of 2009.  As more information and guidance is available, we will continue to keep you updated.