You now have the guidance you needed from the IRS to implement the COBRA subsidy provisions included in the American Rescue Plan Act of 2021 (ARPA).
To compensate for unemployment issues due to the pandemic, the ARPA – brought to life by President Biden on March 11, 2021 – provided 100% COBRA premium subsidy. Now, the IRS granted your wishes and published 86 questions and answers that’ll help you handle all the issues that have cropped up.
One note of caution: While the Q&A, according to the IRS, applies to federal COBRA and comparable state mini-COBRA requirements, any part of a Q&A that applies to federal COBRA only “that discussion refers specifically to Federal COBRA.”
The IRS also clarified “the COBRA premium assistance requirements apply to the employer or plan sponsor, group health plan, or issuer, depending on the facts and circumstances.”
Here are some of the topics covered:
An assistance eligible individual (AEI) is someone who’s:
- a qualified beneficiary due to the reduction of hours of employment or the involuntary termination of employment “other than by reason of an employee’s gross misconduct”
- eligible for continuation coverage for part or all of April 1, 2021 through Sept. 30, 2021, including qualified beneficiaries who are the spouse or dependent child of the employee, and
- covered under the group health plan the day before the reduction in hours or involuntary termination, and lose eligibility for coverage because of it.
Note: Employers must keep a record of an individual’s attestation.
Reduction in hours
What qualifies as a reduction in hours?
- a voluntary or involuntary event
- a furlough, which in the IRS notice means “a temporary loss of employment or complete reduction in hours with a reasonable expectation of return to employment,” and
- a work stoppage, either as the result of “a lawful strike initiated by employees or their reps or a lockout initiated by the employer, as long as… the employer and employee intend to maintain the employment relationship.”
Beginning of assistance period
When can an AEI first receive COBRA premium assistance?
- the first applicable “period of coverage” beginning on or after April 1, 2021 (a period of coverage is a monthly or shorter time when premiums are charged by the plan with respect to coverage provided to qualified beneficiaries)
- COBRA continuation coverage can be waived for any period before electing to receive it, “including retroactive periods of coverage beginning prior to April 1, 2021,”and
- it’s available for coverage periods from April 1, 2021, through
Sept. 30, 2021, if the election is made after Sept. 30, 2021, but within the applicable 60-day election period.
End of assistance period
How long is COBRA premium assistance available to an AEI?
- the first date an AEI becomes eligible for other group health plan coverage or Medicare coverage
- when the AEI isn’t eligible for COBRA continuation coverage, or
- the end of the last period of coverage beginning on or before Sept. 30, 2021.
Other topics covered by the IRS in their Q&A include: extended election period, extensions under the emergency relief notice, comparable state continuation coverage, calculation of premium assistance credit and more.