OCA is continuing to consult with our legal and compliance experts regarding the American Rescue Plan Act (ARPA) of 2021 and its impact on COBRA administration. 

Although the ARPA COBRA subsidy is similar in many aspects to the 2009 ARRA subsidy, it is also very different. Shortly after ARRA was enacted in 2009, the IRS issued guidance that provided clarification to a number of issues and so we anticipate similar guidance with respect to ARPA. Consequently, OCA - like many in the industry - continue to digest the rules - looking to the 2009 ARRA guidance to help find clarity as we anticipate guidance from the IRS in the near future. We will answer all the questions that we can and will update you frequently as we navigate our ways through the rules.

In the meantime, OCA has initiated the following action plans:

Notice 2021-01 Action Plans
  • On our COBRA participant portal, OCA has already posted a copy of the new notice to COBRA qualified beneficiaries, providing guidance on the outbreak period relief issued in EBSA Disaster Relief Notice 2021-01
  • The DOL has expressly noted that a notice is required to the extent prior communications did not contemplate this application of the 1-year rule.
  • It is strongly recommended that these notices are mailed to all impacted Qualified Beneficiaries (QBs) and COBRA participants. By default, OCA will be mailing this relief notice for an additional fee of $2.25 per notice. If after consulting with your legal counsel you believe that a mailing is not required, please let us know by 3/25/21 and we will not mail the notice to your Qualified Beneficiaries. To opt out, please click here.
  • MHP NJ will be absorbing the notice fee cost for OCA's MHP NJ clients. 
ARPA/COBRA Subsidy Action Plans
  • Within the next two weeks, OCA will begin reaching out to each employer/broker with the list of their Qualified Beneficiaries (QBs) and/or COBRA participants to identify who may be eligible for the subsidy on April 1, 2021 (i.e. those who were involuntarily terminated from employment). Remember, to be an eligible individual you must have had an involuntary termination or had a reduction in hours and are not eligible for other group health plan coverage or Medicare. 
  • OCA will be mailing out a Special Election Notice to eligible individuals with the understanding that:
    • ARPA calls for the Department of Labor to issue model notices within 30 days of April 1st  and it is very likely OCA will wait for the DOL to issue the model notice before mailing out the Special Election Notice to eligible individuals.
    • ARPA states that the Special Election Notice must go out within 60 days of April 1st.
    • Eligible individuals will then have 60 days after the date on which the special notice is provided, with the subsidy going back to April 1st.
    • Please note that a special per notice fee will apply.

Additional ARPA COBRA Subsidy FAQs
 
Q: When does the premium subsidy begin and end?

ARPA establishes a 100% COBRA premium subsidy for eligible individuals during the period beginning on April 1, 2021 and ending on September 30, 2021.This means that even eligible individuals who lost health coverage as far back as November 2019 may benefit from the subsidy, since their 18-month maximum COBRA period will not expire until the end of April 2021.
 
Q: Who is eligible for the COBRA premium subsidy?
 
Eligible individuals are those who had an involuntary termination or had a reduction in hours and are not eligible for other group health plan coverage or Medicare.
 
Q: What group health plans are subject to the premium subsidy?

Eligible individuals can receive 100% subsidy for the "COBRA premium" for all group health plans other than Health FSAs. The COBRA premium includes medical, dental, vision, HRAs, and the standard 2% COBRA administration fee.

Q: Does the ARPA subsidy apply to State Continuation?
 
*Yes, the premium subsidy is applicable in states that have a state continuation law. In most states, the premium subsidy assistance would be applicable to only the fully insured medical plan. For groups subject to state continuation, the insurance carrier would be the one receiving the premium tax credit, not the employer.
 
*Answer was updated since OCA's March 11th webinar.
 
Q: Can an eligible individual who either did not previously elect COBRA or elected, but let their coverage lapse, still qualify for the COBRA subsidy?
 
Click here to read the answer and more FAQs.

 
What's Next?

OCA understands how critical it is to provide accurate information quickly, but until further guidance is issued, many of these questions remain unclear (i.e. how exactly will employers receive the premium tax credit, how will refunds be applied to those eligible for the subsidy, etc.). With so much in flux, one could say that right now is the most crucial time for employers, brokers, and OCA to work in tandem to ensure COBRA compliance. 

We want you and your team to know we're on top of this and set expectations for what the next couple of months could look like. We will be back to you again with additional information and resources. To submit any questions, please click here and an OCA representative will get back to you promptly.