Dear Valued Client,

Yesterday, March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law. This Act includes a provision for a COBRA continuation coverage premium subsidy of 100% for qualifying individuals and families during the six-month period beginning April 1, 2021, and ending September 30, 2021. 

The subsidy will be available for Assistance Eligible Individuals (AEIs). COBRA participants must meet the below AEI criteria to be considered: 

  1. Lost coverage due to involuntary termination of employment or reduction in hours.
  2. The COBRA participant is still within the COBRA eligibility period as of April 1, 2021
  3. Eligible COBRA participants who do not have an election in place will have the opportunity to make an election during an Extended Election Period and will be able to take advantage of the subsidy effective April 1, 2021 
  4. 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
  5. Eligible COBRA participants who become eligible for COBRA continuation coverage on or after April 1, 2021, will be eligible for the subsidy while it is in effect  

Under ARPA, premiums for AEIs will be paid by the federal government to employers through credits against employers' Medicare taxes. ARPA requires the Department of Labor (DOL) to provide model notices within 30 days from the date of enactment. Clarity will incorporate the necessary DOL language into a set of AEI notices. 

So that you can understand the participants impacted by this provision, we are actively developing a Simply Smarter solution that will generate customized reports for our clients. These reports will include participants in the lookback period as well as currently enrolled participants that are required to receive notification of the subsidy within 60 days of April 1, 2021.

Clarity will handle all necessary notifications to all COBRA participants and will continue notifying newly eligible COBRA participants within the current standard time frames.

We will continue to monitor guidance regarding the ARPA and the EBSA Disaster Relief Notice 2021-01 and provide updates as we finalize our solution to systematically administer the new regulations. 

Clarity Benefits Solutions