What is ARPA and how does it affect COBRA?

The American Rescue Plan Act of 2021 (ARPA) was signed into law on March 11, 2021.  ARPA is a $1.9 trillion economic stimulus package intended to speed up the U.S. recovery from the COVID-19 pandemic.  Included in ARPA is a government subsidy of 100% of COBRA premiums for Assistance Eligible Individuals (AEIs) – individuals and families who lost coverage because of involuntary termination or reduction in hours.  The subsidy applies for up to six months of coverage from April 2021 through September 2021 – unless the individual’s maximum COBRA period expires earlier.

The subsidy will apply to members eligible through state continuation laws.

Who is eligible for a subsidy?

Assistance Eligible Individuals (AEIs) are individuals and families who experienced an involuntary termination of employment or reduction in hours.

Members must meet the below criteria to be considered an AEI:

  • Coverage was lost due to involuntary termination or employment or a reduction in hours.
  • The member is still within the COBRA eligible period (18 months) as of April 1, 2021 or become eligible for COBRA continuation coverage on or after April 1, 2021.
  • The member has not become eligible for coverage under another employer’s group health plan or Medicare.
  • The member has at least one medical, dental, vision, HRA, or EAP plan.

What is the second election/extended enrollment period?

AEIs who were eligible for continued coverage but did not elect or chose to allow their coverage to lapse will have an opportunity to make a new election during an Extended Election Period if they are still within their maximum COBRA period.

Do I still need to pay the carrier for premiums?

As an employer, you will want to reach out to your carrier(s) to confirm.  For larger group plans subject to federal COBRA rules, the employer will be required to pay the COBRA premium but will be reimbursed through a refundable tax credit.  In the case of smaller employers who are exempt from the federal COBRA rules but must follow state continuation laws, it appears that the subsidy will be covered by the carrier.

What do employers need to do?

  • Review your records to verify which former employees experienced an involuntary termination of employment or reduction in hours to update Flyte’s COBRA Account Manager system. Instructions are available in PDF form here.
  • Reach out to your insurance carrier(s) to confirm who is responsible for your plan subsidies and who will be reimbursed by the federal government via payroll tax credits.
  • Retain your monthly Remittance Reports for your records for documentation purposes and, if applicable, payroll tax credit filings.

What will Flyte send to members?

COBRA members who have been noted as “Eligible” in our COBRA Account Manager system will receive a series of notices required under ARPA after a scheduled system update on May 13, 2021.

  • AEI Subsidy Eligible Notices will be sent to Assistance Eligible Individuals (AEIs) who were already COBRA members when the subsidy began or are entitled to a Second Election Period. There will be a $10 per notice that is mailed, which will be included in the May monthly administration invoice.
  • COBRA Specific Rights Notices with AEI General Notifications for new COBRA eligible members entered in the system after the update.
  • AEI Subsidy Expiration Notices for AEIs whose premium assistance will be coming to an end.
  • AEI Denial Notices for members whose AEI Status is changed from Eligible to Ineligible.