The American Rescue Plan Act (ARPA) included a COBRA and Texas State Continuation subsidy that raised a lot of questions. On April 7, 2021, the Department of Labor provided important FAQ’s as well as the Model Notice needed. This has helped to answer a lot of questions we had!  It is very important that you read and understand the complexity of the requirements for you as an employer offering Group Sponsored benefits.  This law provides 100% COBRA / State Continuation subsidies for certain Assistance Eligible Individuals beginning April 1st – September 30th 2021.

Who Does ARPA apply to?

  • Employers with Under 20 employees that offer Fully Insured Medical Coverage will fall under 9 months of Texas State Continuation (Mini-COBRA).
  • Employers with Over 20 employees that offer any COBRA Eligible Plan including:
    • Medical Plans (Fully-Insured, Partially Self-Insured, Level-Funded)
    • Gap Policies
    • Dental
    • Vision
    • HRA’s
  • Employers with Over 20 employees also qualify for an additional 6 months of Texas State Continuation Coverage once COBRA has exhausted and would be eligible for Fully-Insured Medical Only.

Who is considered an Assistance Eligible Individual?

  • Those employees that have had an Involuntary Termination (Does not include a voluntary termination or for gross misconduct)
  • Reduction in hours (such as reduced hours due to change in a business’s hours of operations, a change from full-time to part-time status, taking of a temporary leave of absence)

Who is responsible for paying the Coverage?

  • Based on those Assistance Eligible Individuals who are eligible to elect coverage and elect within the required time frame – the Employer will be responsible for paying the premiums for the coverage(s) and any administrative fees for those qualified beneficiaries through the assistance period, and will take a credit off the quarterly 941 tax filing.
  • There is still some question as to who is responsible for paying the premiums for those who qualify for State Continuation of Coverage.

 

WHAT SHOULD I DO?

  • Employers with over 20 employees (Federal COBRA / State Continuation) look at all terminations back to April 2019 to determine those who were considered a “Involuntary Termination” or “reduction of hours” as listed above.
  • Employers with under 20 employees that offer a Fully Insured Medical Plan (State Continuation) look at all terminations back to August 2020 to determine those who were considered a “Involuntary Termination” or “reduction of hours” as listed above.
  • For those who use Employee Navigator, we will be assisting you by pulling reports of all terminations for the specific time frames, but you will need to verify the listing is accurate.
  • Look out for further communication!!!

There are a tremendous amount of details within this law that will impact employers.  Know that we are digging through this, and that we are here for you to provide assistance along the way.

Whether you are a client or not, we are here to help you understand and  implement the necessary changes. Give us a call or fill out the form below and we will be in contact with you!