American Rescue Plan Act of 2021 (ARPA)
On March 11, 2021, President Biden signed into law the $1.9 trillion American Rescue Plan Act of 2021 (ARPA, the Act).
ARPA is the result of weeks of negotiations in Congress and attempts to further facilitate the country’s recovery from the impact of the COVID-19 pandemic. The Act includes a provision which creates a 100% COBRA premium subsidy for the period of April 1 through September 30, 2021 – extending additional COBRA enrollment rights for certain qualified beneficiaries (and their families) who have lost group health plan coverage due to an involuntary termination of employment or reduction of hours. These members are referred to as Assistance Eligible Individuals (AEIs). ERISA governed plan sponsors will subsequently receive reimbursements for the subsidy through a tax credit.
We have assembled a timeline detailing how EBPA is addressing the requirements related to this subsidy. If you would like to see this timeline, click here.
You can also view Frequently Asked Questions (FAQs) prepared by the Department of Labor under the American Rescue Plan Act (ARPA) here.
You can view the IRS Notice 2021-31 here.
ARPA Quick Facts
Eligibility. Per the Department of Labor (DOL), AEIs within the past 18 months who experienced a reduction in hours or an involuntary termination that is a COBRA qualifying event are potentially eligible for the ARPA subsidy, as long as they are not eligible for other Group Health Coverage or Medicare. For more information, please visit the Department of Labor here.
Participant Refunds/Credits. If AEIs are already enrolled in COBRA, paid premiums past 03/31/2021, and are approved for the ARPA subsidy, they will receive a refund (to be processed beginning in May).
Tax Credits and Severance Agreements. The ARPA subsidy is paid by Plan Sponsors on behalf of AEIs for ERISA-governed health plans. The IRS 2021-31 provided new information regarding how Employer Subsidies interact with the ARPA COBRA Subsidy. As of 5/18/2021, EBPA will be reporting the ARPA Subsidies based upon the amount the AEI would have been responsible to pay. If you have any questions regarding the new IRS tax guidelines, please contact your tax professional and legal counsel.
Alternative Coverage. Unless a Plan Sponsor affirmatively designated otherwise, AEIs cannot elect to enroll in coverage that is different than coverage in which the individual was enrolled at the time the qualifying event occurred.