The American Rescue Plan Act of 2021 (“ARPA”), which was just passed by Congress and will be sent to President Biden for signature, includes an opportunity for free COBRA coverage for a six-month period from April through September 2021 for employees (and their family members) who experience a loss of group health coverage due to involuntary termination or reduced hours of employment.

The ARPA COBRA subsidy appears to be designed to capture all employees who lost job-based health coverage due to an involuntary loss of work since the COVID-19 pandemic began. Any employee who lost coverage as of April 2020 (when the pandemic began impacting employment) is potentially eligible for the entire six-month subsidy, since their 18-month COBRA period would include the period from April 1 through September 30, 2021 when the subsidy ends. Even employees 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. However, individuals who are eligible for other group health coverage or Medicare are not eligible for the subsidy.

Importantly, the subsidy is available to employees who did not elect COBRA coverage during their original election period, as well as those who initially elected COBRA but let their coverage lapse.  These individuals must be offered an additional window of at least 60 days to elect COBRA coverage. Of course, since COBRA election deadlines have been extended during the pandemic as a result of the DOL/IRS deadline tolling guidance, many individuals are still within their original COBRA election periods. However, this special election opportunity allows these individuals to make a prospective COBRA election for the period beginning April 1, 2021, without requiring payment of premiums retroactive to the original loss of coverage, which is a departure from the normal COBRA rules. The maximum COBRA period is not extended in such a case (that is, it is still counted from the date of the original qualifying event).

Plan administrators are required to begin notifying eligible individuals of the COBRA subsidy within 60 days of April 1, 2021. The U.S. Department of Labor is required to issue model COBRA notices addressing the subsidy, and we expect the government agencies to issue guidance on various issues related to the subsidy in the coming weeks.

Stay Tuned– We will post a comprehensive summary of ARPA’s COBRA subsidy provisions, including the various notification and other requirements, soon.

 

Photo of Paul M. Hamburger Paul M. Hamburger

Paul Hamburger is co-chair of the Employee Benefits & Executive Compensation Group and head of the Washington, DC office. Paul is also a leader of the Practice Center’s health and welfare subgroup and a member of Proskauer’s Health Care Reform Task Force.

Paul…

Paul Hamburger is co-chair of the Employee Benefits & Executive Compensation Group and head of the Washington, DC office. Paul is also a leader of the Practice Center’s health and welfare subgroup and a member of Proskauer’s Health Care Reform Task Force.

Paul provides technical knowledge and advice to employers on all aspects of their employee benefit programs, and advises employee benefit plan trustees and service providers on ERISA and employee benefit plan-related matters. He has extensive experience in negotiating service provider and outsourcing agreements. Paul frequently represents clients before government regulatory agencies, including the Internal Revenue Service, Department of Labor and Pension Benefit Guaranty Corporation.

Paul focuses on all matters affecting employee benefit plans, including:

  • 401(k) plans, ESOPs, and defined benefit plans, including cash balance pension plans
  • Executive compensation plans and agreements
  • Welfare benefit plans, including cafeteria plan, COBRA, and health care reform (PPACA) issues

Recognized by a number of publications for his exceptional work, Paul is described by The Legal 500 United States as “one of the best in his field; he inspires a high level of confidence and is a pleasure to work with.” Chambers USA notes that Paul’s clients refer to him as “a creative, business-oriented and brilliant lawyer who educates and enlightens.”

As a noted thought leader in his field, Paul frequently speaks on employee benefit matters. In addition, he served for several years as an adjunct professor at Georgetown University Law Center teaching the LL.M. tax course on ERISA Health and Welfare Benefit Plans.

An author of numerous articles on employee benefits matters, Paul has produced a number of nationally-circulated loose leaf publications, published by Thompson Information Services: Mandated Health Benefits – The COBRA Guide, The Guide to Assigning & Loaning Benefit Plan Money, and The Pension Plan Fix-It Handbook. Most recently, he was the managing author of the 6th edition of The New Health Care Reform Law – What Employers Need to Know (A Q&A Guide), published by Thompson HR.

Photo of Roberta Chevlowe Roberta Chevlowe

Roberta K. Chevlowe provides advice to employers and boards of trustees of multiemployer benefit plans on a broad range of issues relating to their retirement, health and other employee benefit plans. With nearly three decades of experience practicing in this area, Roberta employs…

Roberta K. Chevlowe provides advice to employers and boards of trustees of multiemployer benefit plans on a broad range of issues relating to their retirement, health and other employee benefit plans. With nearly three decades of experience practicing in this area, Roberta employs a practical, business minded approach to helping her clients comply with the various requirements imposed by ERISA, the Internal Revenue Code, COBRA, the Affordable Care Act and other federal and state laws affecting employee benefit programs. Roberta’s practice also includes advising clients in connection with benefit claim appeals, lawsuits and government audits; drafting plan documents, policies and employee communications materials; and negotiating with plan service providers.

Roberta is best known for her work in the area of COBRA compliance and for advising employers in connection with the benefits they provide to employees’ domestic partners and same-sex spouses. She is a co-author of The COBRA Handbook and lectures and publishes articles on a variety of employee benefits topics. In addition, Ms. Chevlowe is a member of Proskauer’s Health Care Reform Task Force, and she led the Firm’s Domestic Partner Benefits Task Force.