March Madness: Employee Benefits Edition
While the basketball world is gearing up for March Madness, the recent flurry of legislation and guidance impacting employee benefit plans has created a different kind of March madness for employers, plan sponsors, and administrators. Below is a brief overview of the recent Outbreak Period guidance and COBRA subsidy under the American Rescue Plan Act. Links to more in-depth information are provided in each section.

ProBenefits will continue to monitor guidance from the agencies and will communicate further updates as information becomes available, including necessary administrative updates. Updates will also be posted on our website for easy access for our employer clients and broker partners.

Outbreak Period 

The Department of Labor and IRS recently issued Disaster Relief Notice 2021-01. This Notice clarifies that the COVID-19 extensions for COBRA deadlines, claims and appeals deadlines for Health FSA and HRA plans, and deadlines for HIPAA special enrollment periods continue beyond February 28, 2021 (one year from the declaration of the national emergency) and that the extensions apply on an individual-by-individual basis. Deadlines for individuals that fall within the Outbreak Period (defined as the period beginning March 1, 2020 and ending 60 days after the announced end of the COVID-19 national emergency) are disregarded (delayed/suspended) until the earlier of (1) one year from the date the plan or individual was first eligible for relief or (2) the end of the Outbreak Period.  

See our in-depth overview of the Outbreak Period guidance: DOL Guidance Clarifies Duration of Outbreak Period Extensions
 
100% COBRA Subsidy (April 1, 2021 – September 30, 2021)

Yesterday, President Biden signed the American Rescue Plan Act of 2021 (“ARPA”) into law. Under the ARPA, assistance eligible individuals (“AEIs”) who lost coverage due to an involuntary termination or reduction of hours are eligible for a 100% COBRA premium subsidy for coverage(s) other than a Health FSA. The subsidy period is a maximum of 6 months beginning April 1, 2021 and ending September 30, 2021. The applicable COBRA premium during the COBRA subsidy period is paid 100% by the employer (private employers and state/local government employers) who will receive reimbursement for such payment from the federal government through a payroll tax credit. For insured group plans not subject to federal COBRA (e.g., when state mini-COBRA requirements apply to exempt small employer plans or to large group plans after federal COBRA is exhausted), the insurance carrier is responsible for complying with the COBRA subsidy provisions.

COBRA participants must meet the criteria below to qualify as an AEI:
  • Coverage was lost due to involuntary termination of employment or reduction of hours, and,
  • The individual is within the COBRA eligibility period as of April 1, 2021, and either,
  • Eligible individuals who do not have an election in place will have the opportunity to make a prospective election during an extended election period and will be able to take advantage of the subsidy effective April 1, 2021; or,
  • Eligible COBRA participants who have an election in place as of April 1, 2021 will be able to take advantage of the subsidy effective April 1, 2021; or,
  • Eligible individuals who become eligible for COBRA continuation coverage on or after April 1, 2021 will be eligible for the subsidy while it is in effect.  

The subsidy period may be shortened for AEIs who reach the end of their COBRA maximum coverage period or who become eligible for certain other group health plan coverage or Medicare.

There are required subsidy notices that must be provided to AEIs.

See our in-depth overview of the COBRA subsidy: American Rescue Plan Act Includes 100% COBRA Subsidy