As your COBRA administrator, Ameriflex is committed to helping you navigate the new rules and changes to COBRA under The American Rescue Plan Act of 2021 (ARPA).
Here, you will find the latest information regarding the COBRA subsidy, including administrative updates from Ameriflex, FAQs, and next steps.
COBRA Premium Subsidy Overview
On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act of 2021 (ARPA). The legislation went into effect April 1, 2021 and contains provisions for a 100% COBRA premium subsidy for eligible individuals and their family members.
- The subsidy covers 100% of the COBRA premiums for employees and family members who are losing group health coverage as a result of an involuntary termination of employment or reduction in work hours.
- The subsidy took effect April 1, 2021 and will end on September 30, 2021.
- Any eligible individual who is enrolled in COBRA or will enroll in COBRA on or after April 1, 2021, and before September 30, 2021, will have the subsidy available to them.
- The subsidy is not available for individuals who voluntarily end employment or become eligible for group health plan coverage elsewhere.
How do I know if I qualify for the COBRA subsidy?
All individuals eligible will receive a new COBRA election notice in the mail. The notice will describe and detail who is eligible and how to enroll.
To be eligible for a subsidy, ALL of the following must apply:
- Individual is a qualified beneficiary with a qualifying event under COBRA;
- The qualifying event occurs on or after November 1, 2019;
- The individual elects coverage (again, the new notice will detail how to elect);
- The individual does not have any other offer of employer-sponsored coverage or access to Medicare coverage.
Individuals who previously declined or discontinued COBRA coverage are still eligible to receive the subsidy as long as they are still within their coverage period. The individual must enroll within 60 days of the notice they receive.
Individuals who experience a 2nd qualifying event will be eligible for the subsidy.
Individuals who elect COBRA under the subsidy do not have to pay retroactively to the date of coverage but can choose to have coverage begin on April 1, 2021.
Currently, the ARPA guidance does not address whether the subsidy applies if an individual has a 2nd qualifying event but further guidance is anticipated.
Will Ameriflex communicate with eligible participants about their subsidy eligibility and will there be a charge?
Ameriflex will mail the general notification to eligible participants by May 31, 2021. Participants will also be required to complete an attestation form which outlines the participant’s responsibilities in order to receive the subsidy.
There will be no additional charge for this service to our existing clients. New clients should contact their Vice President of Sales for pricing details.
Should eligible COBRA participants continue to pay for April 2021 and May 2021 monthly premiums if they have already elected coverage?
Yes, COBRA participants who have not paid April 2021 or May 2021 premiums should make a payment, even if they believe they will be eligible for the subsidy, to ensure there is no disruption in carrier coverage. Participants are encouraged to continue paying their monthly premiums by the indicated deadlines in the letters they have received to date.
Once the subsidy is applied to the participant’s account, payments already made will be credited forward to future months of COBRA coverage. If the participant’s COBRA ends on or before September 30, 2021, credits can be refunded back to the participant for any months the subsidy has been applied or for months they do not need additional coverage beyond the subsidy period.
Participants will receive an attestation form in their communication to be mailed by May 31, 2021. They will need to complete this form prior to the subsidy being applied to their account as the attestation form reviews the participant’s obligations in order to receive the subsidy.
Do current participants need to pay their April premiums?
For participants who have paid for April or future months and who are eligible for the subsidy, once the subsidy is added to the system those payments will credit forward to future months of COBRA. If the participants’ COBRA ends on or before 9/30/2021, the monies will go to an unallocated bucket, where that money can be refunded. Additionally, if the payments are credited forward for months that the participant could still have COBRA coverage, ARPA requires refunds for any subsidized months to be paid within 60 days of the date the premium was paid.
COBRA participants who have not paid April, may wish to pay their April 2021 premium, even if they believe they will be eligible for the subsidy.
Does the subsidy apply to medical, dental and vision coverage?
Yes, the subsidy will apply to medical, dental, and vision coverage, depending on what the participant has elected to continue.
What do I need to do to get the subsidy?
The individual must elect COBRA as outlined in the new COBRA election notice. Those individuals who are eligible will have 60 days after the date of the new COBRA notice to elect coverage. If at any time the eligible individual becomes eligible for another group health plan or Medicare, the individual is required to notify the plan of such new eligibility. If the individual does not notify of such new coverage the fine is $250 for each failure and if the failure was fraudulent, the penalty may be as high as 110% of the subsidy received.
What about Medicare eligible ptps with non-eligible dependents?
Neither the law nor the DOL FAQ reference dependents of Medicare eligible individuals. The subsidy is available only to individuals who are involuntarily terminated from employment or who experience a reduction in work hours.
Is state continuation any part of this?
Yes, Assistance Eligible Individuals qualify for the subsidy under state continuation. Nothing else regarding state continuation is affected, however.