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Reminder on COBRA and ARP Deadlines

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Word & Brown has shared several updates via our Newsroom, broker newsletters, and Compliance articles concerning the effects of the American Rescue Plan (ARP) Act, which was signed into law in March 2021. As you know, the ARP implements some of the most significant changes to the employee benefits industry since the inception of the Affordable Care Act (ACA) – particularly in the COBRA space. It temporarily provides 100% federally subsided, premium-free COBRA to “Assistance Eligible Individuals” (AEIs) across a six-month window ending 9/30/2021.
 
Be sure your employer clients are aware of their responsibilities related to employee notifications on their updated COBRA continuation rights under ARP.
 

COBRA and Mini-COBRA

COBRA is a federal law that allows a person who has lost eligibility for a group health plan to maintain that coverage for a certain duration of time, usually 18-36 months, depending on the situation. Federal COBRA law applies to employers with 20 or more employees (as of January 1st each year), based on 50% or more of the typical workdays of the prior calendar year.
 
Some states have “mini-COBRA” laws providing similar benefit-continuation options that apply to smaller employers below the federal employee threshold. California’s mini-COBRA law is known as Cal-COBRA, and it applies to groups with 2-19 employees. Nevada does not have a state mini-COBRA option.
 
Federal COBRA law is an employer responsibility. Therefore, Federal COBRA is generally administered entirely by the employer/plan-sponsor, usually with the assistance of a COBRA Third Party Administrator (TPA).  Cal-COBRA is generally a carrier responsibility in the fully insured space, and is administered almost entirely by insurance carriers.
 

ARP’s COBRA Changes

ARP provides temporary, premium-free COBRA continuation options to “Assistance Eligible Individuals (AEIs)” who have lost eligibility for their group health plans because of an employee’s involuntary job termination or reduction of hours.
 
AEIs can be employees, former employees, spouses, or dependent children. Each must have lost eligibility for the group health plan, due to the main employee’s involuntary termination or reduction of hours. AEIs are not required to pay their COBRA premiums from April 1, 2021, through September 30, 2021. If an AEI inadvertently pays a COBRA premium during the subsidy window, the AEI must be issued a refund within 60 days.
 

Important Approaching Deadlines

The ARP Act’s COBRA subsidies require several notices in order for the law to operate. Employers in the federal COBRA category are generally responsible for sending these notices out to all persons eligible for the subsidy themselves.
 
Employers in the Cal-COBRA category generally do not need to send these notices, since they will be sent and facilitated by the plan’s health insurance carrier. However, insurance carriers in the Cal-COBRA space may require preliminary information from employers before they can send these notices in accordance with the law.
 
Regulators have indicated that enforcing agencies are aware of the challenges around the new law and fast-approaching deadlines. They are taking employers’ best-faith compliance efforts into consideration before assessing penalties for non-compliance.

 
Several of the new notices and related deadlines for COBRA notification and ARP Act are as follows:
  • Federal COBRA and Cal-COBRA:
    • At time of qualifying event during the subsidy window, a general notice must be provided to all eligible persons who have a qualifying event caused by a reduction of hours or involuntary termination of employment from April 1, 2021, through September 30, 2021. This can be provided separately or with the COBRA election notice.
  • Federal COBRA – Second-Chance Enrollment Opportunities, Due by May 30, 2021:
    • A notice of the extended COBRA election period to any AEI in the federal COBRA category who had a qualifying event before April 1, 2021, must be provided by May 30, 2021. This does not include those whose maximum COBRA continuation period, if COBRA had been elected or not discontinued, would have ended before April 1, 2021.
      Note: Second-chance enrollment opportunities are generally unavailable to AEIs with employers in the Cal-COBRA category.
  • 15-45 Days Before Premium Assistance Expires:
    • A notice explaining the expiration of periods of premium assistance, explaining that premium assistance will expire soon, the date of expiration, and that the individual may be eligible for coverage without premium assistance through COBRA or coverage under a different group health plan must be provided 15-45 days before the individual’s premium assistance expires. Coverage can also be available through a state exchange or Medicaid/Medi-Cal.

 
This article is furnished as an abbreviated overview of some of the ARP deadlines affecting your clients.  For more information, check out our prior, more-detailed post here.
 


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