Dear Brokers,

We have been hearing from many of you about the upcoming American Rescue Plan Act (ARPA) COBRA subsidy changes. Below is an overview about some of the changes that may help answer your questions while we await additional guidance from the Department of Labor.

The American Rescue Plan Act of 2021 & COBRA Subsidy Changes
The American Rescue Plan Act of 2021 (ARPA), enacted into law on March 11, 2021, includes a number of provisions requiring immediate action by employers. One of the provisions provides for a 100% federal subsidy of COBRA premiums during the period of April 1, 2021, through September 30, 2021.

The ARPA COBRA subsidy is available to “assistance eligible individuals” (AEIs), generally defined as employees who were involuntarily terminated, or who experienced a reduction in hours, as well as their covered dependents.

Planning Action Items for Employers
While we await clarifying guidance on these ARPA COBRA provisions, employers can start planning now, for example:
• Start identifying the population likely to be “AEIs.” It may be possible to leverage payroll or COBRA vendor data reports for this. Generally, though, these would be individuals who experienced a qualifying event (QE) due to involuntary termination or reduction in hours in the past 18 months (which is the maximum COBRA coverage period required by law). For plans with group health coverage continuing through the last day of the month, this should include qualifying events at least as early as October 1, 2019.
• Begin to pull employment or payroll records needed to determine whether a termination was voluntary or involuntary. Flag cases that may be unclear, to revisit once additional clarifying agency guidance is available (e.g., voluntary layoffs, early retirements, severance agreements).
• Confirm how the plan will ensure that AEIs who receive subsidized coverage during the six-month window do not get dropped from coverage, except as permitted by the ARPA (e.g., upon eligibility for other employer coverage or Medicare, or expiration of maximum COBRA period). This may require coordination with a COBRA vendor and/or the insurance carrier or third-party administrator for the group health coverage.
• If the employer provides multiple coverage options under its plan, determine whether to permit AEIs to switch to a different, less expensive option than the one in which they were enrolled at their qualifying event.

Source: https://www.perkinscoie.com/en/news-insights/employer-responsibilities-under-the-arpa-cobra-subsidy.html

Our Legal, Compliance and Sales teams are meeting regularly to determine how we will operationalize and administer the changes. Once we have more information, we will communicate our approach to you and other stakeholders.

Thank you for your patience as we await more guidance and determine next steps.

Sincerely,
Keith Ledoux
Vice President, Commercial Line of Business & Business Development