COBRA Alert: Enhanced Benefits for Those Eligible

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARPA), which provides important health insurance benefits to certain eligible individuals. Specifically, the ARPA requires employers to cover 100% of Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums from April 1, 2021, through September 30, 2021, for former employees who:

• Became COBRA-eligible in or after November 2019;
• Lost employer-sponsored health insurance because of an involuntary termination of employment or because of an involuntary reduction in hours; and
• (1) Elected COBRA; (2) elected COBRA but let the coverage lapse; or (3) did not elect COBRA.

Former employees are not eligible for the ARPA COBRA subsidy if they:

• Resigned voluntarily, or voluntarily reduced their hours;
• Were terminated for gross misconduct;
• Are now covered under another group health plan; or
• Are Medicare-eligible.

Note, if COBRA coverage is set to expire before September 30, 2021, ARPA does not extend the expiration date; and many questions remain. For instance, does the ARPA COBRA subsidy extend to those who left employment per a mutual decision, for “good reason” under an employment agreement, or pursuant to a voluntary exit incentive plan? The Department of Labor is currently drafting regulations and guidance that should help answer these questions.

What Do Eligible Former Employees Need To Do?

For anyone who is covered by COBRA as of April 1, 2021, nothing needs to be done. It is up to the employer or the employer’s health insurance carrier to ensure that the premiums are paid for the relevant period. For those who let COBRA lapse or had not elected COBRA, the employer or the health insurance provider must provide notice of the new benefit and of a new enrollment period. The new enrollment period begins on April 1, 2021 and ends 60 days from delivery of the ARPA COBRA notification.

If you believe you may be entitled to coverage, are interested in receiving the benefits, and are not contacted by your former employer or their provider in the next few weeks, consider reaching out to the employer’s Human Resources Department or the insurance carrier to ask for information about your COBRA benefits under ARPA, or contact your employment lawyer.