American Rescue Plan Act (ARPA)

COBRA election, special enrollment periods, and claims and appeals deadlines
Tufts Health Plan is taking measures to allow for the extended deadlines affecting COBRA continuation coverage, special enrollment periods, claims for benefits, appeals of denied claims, and external review of certain claims. 

According to the federal guidance, the national emergency due to the COVID-19 outbreak began on March 1, 2020. At that point, timelines associated with COBRA, making enrollment changes due to special enrollment rights, submitting and appealing claims, and external claims review were paused. Pursuant to the EBSA Disaster Relief Notice, those timelines will resume the earlier of (a) one-year from the date which you were first eligible for relief under the federal guidance, or (b) the end of the Outbreak Period (which is 60 days after the end of the COVID-19 National Emergency). The federal government has not yet announced the end of the National Emergency. 

Additionally, IRS Notice 2021-58 clarifies how these federal extensions impact COBRA premium payments given that qualified beneficiaries have 60 days to elect COBRA after receipt of a COBRA election notice and COBRA premiums are due 45 days following that initial COBRA election (105 days total), with a 30-day grace period. This IRS Notice provides the following example:  

IRS Example #3:

(i) Facts. Individual C participates in Employer Z’s group health plan. Individual C has a qualifying event and is provided a COBRA election notice on August 1, 2020. When must Individual C elect COBRA continuation coverage and, if Individual C elects COBRA continuation coverage, when must Individual C make the initial COBRA premium payment?   

(ii) Conclusion. Individual C has until September 30, 2021 (one year and 60 days after August 1, 2020) to elect COBRA continuation coverage. If Individual C elects COBRA continuation coverage after September 30, 2020 (but on or before September 30, 2021) Individual C has until November 14, 2021 to make the initial COBRA premium payment (one year and 105 days after receipt of the election notice).  If Individual C makes the initial COBRA premium payment on November 14, 2021, that premium payment would include the monthly premiums for August 2020 through October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months Individual C is eligible for COBRA continuation coverage.

Employers should consult with their attorneys to determine the appropriate timing requirements and COBRA compliance under their plans. See Tufts Health Plan ’s FAQ above under “COBRA premium assistance (American Rescue Plan)” for information on how these federal deadline extensions interact with the American Rescue Plan’s COBRA rules.

Under ARPA, “Assistance Eligible Individuals” (defined in a later FAQ), are eligible for COBRA premium assistance from April 1, 2021, through September 30, 2021.

It is the employer’s responsibility to determine eligibility and notify beneficiaries who may be eligible for ARPA premium assistance under COBRA or state continuation of coverage (mini- COBRA). The Department of Labor (DOL) has issued guidance on operation of COBRA premium subsidies and model notices. 

For state continuation of coverage (mini-COBRA), it is the employer’s responsibility to provide notice to Tufts Health Plan, identifying those beneficiaries who are eligible for ARPA premium assistance and have elected state continuation of coverage (mini-COBRA). 

For premium payment and tax credit responsibilities, see below. 

• If the group health plan is subject to federal COBRA (i.e., the employer maintaining the plan employed 20 or more employees in the prior year), coverage would be managed by the employer group. The employer would pay the premium for persons enrolled in COBRA between April 1, 2021, and September 30, 2021, and seek the associated tax credits. 
• If the group health plan is not subject to federal COBRA, then mini-COBRA or comparable state continuation of coverage may apply, and the insurer will pay the premium between April 1, 2021, and September 30, 2021, and collect the associated tax credits. We may receive further guidance regarding operation of mini-COBRA or comparable state continuation of coverage that could impact this. We will update this FAQ accordingly. 

Please note, the employer remains responsible for COBRA and mini-COBRA administration, such as eligibility, enrollment, and termination decisions, and to provide timely notice to Tufts Health Plan, identifying those mini-COBRA beneficiaries who have enrolled or who will be terminated. 

“Assistance Eligible Individuals” (AEIs) are eligible for COBRA premium assistance under ARPA. An AEI is someone who, during the period from April 1, 2021, through September 30, 2021, is eligible for COBRA (COBRA qualifying event must be involuntary termination of employment [other than for gross misconduct] or involuntary reduction in hours), and 2) elects COBRA. 

There are four categories of AEIs. If the individual falls into one of the first two categories outlined below, then the COBRA effective date would follow existing COBRA rules (i.e., retroactively to the date the individual lost coverage due to involuntary termination or reduction in hours): 

1. Individual elected COBRA prior to April 1, 2021, and remains on COBRA past April 1, 2021
2. Individual becomes eligible and elects COBRA in a timely manner between April 1, 2021, and September 30, 2021

The following two categories, numbers 3 and 4 below, only apply to those eligible for federal COBRA, not mini-COBRA, unless a State law or program provides for a similar extended election right and an individual otherwise satisfies the requirements. If an individual falls into the remaining two categories, they will receive an additional/extended COBRA election opportunity and can begin their coverage retroactively to the date the individual lost coverage due to involuntary termination or reduction in hours, retroactively to April 1, 2021 or prospectively (premium assistance is only provided between April 1, 2021 and September 30, 2021). Coverage would end on the date COBRA would have exhausted if elected in a timely manner or if it was never discontinued: 

3. Individual was eligible to elect COBRA prior to April 1, 2021, but waived it or missed the election period, but if they had previously elected it, they would still be receiving COBRA continuation past April 1, 2021
4. Individual elected COBRA but discontinued it prior to April 1, 2021, but if they didn’t discontinue, they would still be receiving COBRA continuation past April 1, 2021 

For numbers 1, 3 and 4 above: If the initial COBRA qualifying event was November 1, 2019, and the COBRA coverage had an 18-month maximum coverage period, COBRA would run until May 1, 2021 (past the April 1, 2021, COBRA premium assistance start date). The individual may be eligible for COBRA premium assistance for the month of April. 

ARPA does not extend the maximum COBRA coverage period. Additionally, an individual is not eligible for COBRA premium assistance if they are eligible for other group health coverage, such as through a new employer’s plan or a spouse’s plan (not including excepted benefits, a qualified small employer health reimbursement arrangement [QSEHRA] or a health flexible spending arrangement [FSA]), or if the individual is eligible for Medicare. 

Yes, retroactive coverage is allowed. However, an individual’s COBRA coverage effective date depends on whether the election is made under the previous federal extension for COVID-19 relief* (retroactive effective date) or the ARPA extended election period (effective date is on or after April 1), or both. If both are elected, a COBRA beneficiary’s effective date is retroactive to the date the individual lost coverage due to involuntary termination or reduction in hours, and the beneficiary will receive premium assistance beginning April 1 if the beneficiary timely elected under ARPA (60 days for federal COBRA), but the individual would be responsible for premiums owed prior to April 1, 2021 and after September 30, 2021, if applicable.  IRS Notice 2021-58 (Examples 9 and 10) clarifies COBRA premium payments when a qualified beneficiary elects both retroactive COBRA continuation coverage under the federal extensions and ARPA COBRA premium assistance.

*See FAQ on this page titled “Federal deadline extensions for COVID-19 relief” for more details on the previous federal extensions. 

For federal COBRA (20+ employees), the employer would pay and collect the tax credit (for coverage between April 1, 2021, and September 30, 2021). If the former employee is looking to retroactively enroll in federal COBRA prior to April 1, 2021, under the DOL/IRS rules, then the employer may seek back premiums to retroactively restore coverage. Please see IRS FAQ #58 and IRS Notice 2021-58.