DOL Releases More Details About ARPA Coverage

On March 11, 2021, President Biden signed the American Rescue Plan Act  (ARPA) which requires most employers to temporarily pay for health insurance continuation coverage (commonly referred to as COBRA) during the period between April 1 and the earlier of September 30, 2021, when the individual becomes eligible for Medicare or other group health insurance (through, for instance, a spouse or new employer) or when the individual’s 18 or 12-month continuation period expires).  This ARPA coverage applies to employees (and their qualified family members) whose hours were reduced, were laid off or were involuntarily terminated (for other than gross misconduct) anytime after October 2019, but who are still within the 18 month COBRA continuation period (or similar 12 month continuation period under Ohio’s mini-COBRA statute).    ARPA applies to for-profit, governmental, non-profit, large and small employers (who might not even be otherwise subject to COBRA), who will receive a credit against their Medicare payroll taxes for the amount of ARPA coverage provided in 2021.   On April 7, 2021, the DOL released FAQs and model notices for employers to provide to potentially eligible employees, including:  a Notice for Assistance Eligible Individuals (AEIs) who experience a qualifying event  between April 1 and September 30, 2021; a Notice for AEIs  who experienced a qualifying event prior to April 1, 2021 and are either currently enrolled, never enrolled or discontinued COBRA coverage; a Notice to be used by plans subject to Ohio's Mini-COBRA statute; a Notice of Expiration Period; and a summary of the ARPA premium assistance and Request for Treatment as an AEI form.  

Employers (and their COBRA administrators) should identify those former employees who are still within their 18 month COBRA (or, if applicable 12 month mini-COBRA) continuation period and send them the required notices before the end of May.  Even if the former employees never elected COBRA or dropped such coverage, they are entitled to elect within 60 days the new free (to them) ARPA coverage retroactive to April 1, 2021 if they have not become eligible for Medicare or another group medical plan.  Employees are not required to elect the new ARPA coverage (and may not want to do so if they already purchased an individual health plan which will not permit them to drop or to re-enroll once the ARPA coverage lapses, the individual plan has better benefits or deductible, they have already reached their deductible and do not want to start over with a new plan, or are concerned about losing tax subsidies, etc.).   Employees terminated after April 1 can receive the model notice with their regular COBRA notice (or it can be sent separately).

The DOL has provided a model “alternative” notice to former employees of small employers who are eligible for the ARPA coverage, but only under Ohio’s mini-COBRA statute.   This form requires a remarkable amount of editing by employers and/or their health plans.  Notably, ARPA does not change the election deadlines for Ohio’s mini-COBRA statute and it does not appear as though employees only covered under Ohio law may be entitled to ARPA coverage if they did not first timely elect and maintain continuation coverage under Ohio law.

Q6: Does the ARP change any State program requirements or time periods for election of continuation coverage?

No. The ARP does not change any requirement of a State continuation coverage program. The ARP only allows Assistance Eligible Individuals who elect continuation coverage under State insurance law to receive premium assistance from April 1, 2021 through September 30, 2021. It also allows Assistance Eligible Individuals to switch to other coverage offered to similarly situated active employees if the plan allows it, provided that the new coverage is no more expensive than the prior coverage. See Q15 and Q17 for more information.

Employers are also required to notify former employees between 15 and 45 days before their ARPA coverage is about to expire and the DOL has provided a Notice of Expiration of Period for such purpose.  

The statute and FAQs do not address a host of outstanding issues and ambiguities and the IRS has not yet issued any guidance about the available tax credits or refunds.  

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Department of Insurance Explains How Ohio’s Newly-Amended Mini-COBRA Coordinates with Federal Stimulus Act.

Last week, the Ohio Department of Insurance issued guidelines about how employees of small employers (i.e., 20 or fewer employees) who are involuntarily terminated may qualify for continued health insurance that is 65% subsidized by the federal government. Governor Strickland signed legislation which amended Ohio’s mini-COBRA (at Ohio Revised Code §3923.38 and §1751.53) and will affect health insurance policies issued or renewed for small employers after April 1, 2009. Among other changes, the statute extends the continuation period from six months to one year. The Department of Insurance also includes model notices on its website which all small employers and non-ERISA self-insured employers must use to notify laid off and other involuntarily terminated employees of their rights under the American Recovery and Reinvestment Act (“ARRA”) to continue their health insurance with 65% of the cost subsidized by the federal government. Insurers are also required to notify employees receiving continuation coverage since February 17 of their ARRA rights.

Unlike the subsidized COBRA continuation under the ARRA, under Ohio’s mini-COBRA, small employers are not required to front 65% of the insurance premium; rather, the insurance company will handle the former employee’s continuation payments and also receive the tax credits. Also unlike the federal ARRA, employees of small Ohio employers do not get a free “do-over” or extended eligibility period if they failed to elect continuation coverage within the deadlines right after they were terminated.

Insomniacs may read the full Department of Insurance revised guidelines at http://www.ohioinsurance.gov/ConsumServ/COBRAStimulusSmallEmployers.pdf. The DOI’s model form can be accessed at http://www.ohioinsurance.gov/ConsumServ/COBRAContinuationCoverageElectionNotice.doc. Other information about ARRA and Ohio’s mini-COBRA law are available at http://www.ohioinsurance.gov/ConsumServ/COBRA.htm.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.