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Q&As from the American Rescue Plan and its Effect on Health and Welfare Benefits

Wednesday, March 17, 2021

COBRA Question:  What constitutes “involuntary”? Does it have to be due to COVID?  Dependent turning 26?  Voluntary reduction in hours?  What about in the situation of misconduct?

Answer:  Based on the guidance involuntary is defined as:

  • Individuals who lose coverage during Period of Coverage due to an involuntary termination
    of employment or because of a reduction of hours
  • Individuals who lost coverage and did not elect COBRA but would otherwise have been eligible
    for the premium subsidy during the Period of Coverage.
  • Individuals who elected and terminated coverage prior to 4/1 and who would otherwise be eligible for the premium subsidy

We are waiting for additional guidance regarding other “involuntary” scenarios. 

COBRA Question: What if the employee has other coverage available through another employer as they have moved on?

Answer:  Special notices should be delivered to all that qualify, whether or not they have other coverage. 

COBRA Question:  Who is responsible for sending out the COBRA special notices? 

Answer:  Whoever administers the COBRA for the employer, in most cases the Third Party Administrator (TPA).

DCAP Question: Will we have to offer a special enrollment period for this?  Are there any guidelines on the dates that we need to do this and how long we need to open the special period?

Answer:  Yes. Employers may voluntarily amend their plan to allow the increase as long as the amendment is adopted by the last day of the plan year.  Plan documents will also need to be amended.

FFCRA Question: If we chose to extend through the end of March, for FFCRA, we can now choose whether we extend again?

Answer: Yes.  This extension is voluntary at the employer level.

DCAP Question:  If someone elects the new amount, would employers just take the new amount divided by remaining pay periods to figure the new deduction? 

Answer:  Yes. 

COBRA Question:  What if offer COBRA for a period longer than is required even for terminated employees we offer for 36 months – Does this apply for the full period?  What if we offered subsidized COBRA for a period of time after they were terminated?

Answer:  The COBRA extension deadline relief we refer to here provides that COBRA deadlines that otherwise would occur during the “outbreak period” (the period beginning March 1, 2020 and ending 60 days after the announced end of the presidentially declared national emergency) must be tolled until the earlier of one year from the date the deadline otherwise would have applied or the end of the outbreak period.

COBRA Question:  If the premium subsidy is only good from 4/1-9/30, for those that were COBRA eligible and elect it now, who is responsible for the premium before 4/1? 

Answer: The Qualified Beneficiary would be responsible for all months of premium back to the event date.

COBRA Question:  Does the COBRA subsidy apply to all employers?  Nonprofit?  

Answer: The ARPA Subsidy applies to both Federal COBRA and State Continuation for both large and small employers’ qualified beneficiaries.  It also applies to all private market employers and includes non-federal governmental entities (e.g., states, cities, counties, school districts, watershed districts, etc.) and tribal entities in their governmental capacity.

COBRA Question:  What all does the COBRA subsidy apply to?  Health insurance only or all coverages? 

Answer: “Group health plans subject to COBRA” really means group health plans subject to COBRA,  not just major medical – with one exception. Health flexible spending arrangements offered through cafeteria plans are not subject to the ARPA special COBRA provisions. Other group health plans including dental coverage, vision coverage, most employee assistance programs, most on-site clinics and wellness programs, and HRAs are subject to the ARPA special COBRA provisions. The definition of group health plan is far-reaching.

COBRA Question:  If someone was on COBRA previously, are they locked into the same level of coverage they previously had?

Answer: Maybe. An employer sponsoring the group health plan to which COBRA applies may permit AEIs to elect a different coverage option than the coverage option otherwise required under COBRA (i.e., the coverage option the person was enrolled in immediately prior to the qualifying event). The different coverage has to be a coverage option available to similar situation active employees and cannot be excepted benefits, a health FSA, or a QSEHRA. For example, a qualified beneficiary covered under a major medical plan’s more expensive coverage option (e.g., low deductible) could change to a less expensive coverage option (e.g., higher deductible) under the major medical plan. This could help AEIs obtain coverage at a lower cost. NOTE: Whether this is permitted is a decision for the employer that sponsors the major medical plan. It is not required.

 FFCRA Question: Can we extend EPSLA without resetting the 80 hours that may have already been used?

Answer:  No – you only get one bite at the apple.

FFCRA Question:  If we decide to participate, do we have to adhere to all guidelines or can we pick and choose? For example, continuing to allow FFCRA but not reset the clock for those that have already used their 10 days.

Answer: Yes, if you want to be reimbursed.

COBRA Question:  If a QB was eligible for COBRA 8/1/20, but waived due to cost, they can prospectively sign up 4/1/21? 

Answer:  Yes.  The subsidy will cover premiums between 4/1/21-9/30-21 only. 

COBRA Question: What if someone already paid their COBRA premium through 9/30/21?

Answer:  Yes, they would qualify.

COBRA Question:  Does the COBRA subsidy apply to all employers?  Non-profits?  Public/State/Local governments?

Answer:  Yes – it all please to all.

 COBRA Question: If Qualifying Beneficiary currently has availability under a spouses’ plan can they still claim subsidy?

Answer:  No.  If they have their own individual plan, they can.

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

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