On March 11, President Biden signed into law the American Rescue Plan (ARP) Act which included a 100% COBRA subsidy provision.
Your help needed
We need your help to identify those who are eligible for the subsidy and considered an Assistance Eligible Individual (AEI). This applies to any former employee who is still within their COBRA period (usually 18
months), so we are looking at terminations back to November 2019.
An AEI is a former employee who:
- Experienced a COBRA qualifying event due to an involuntary termination or a reduction in hours (voluntary or involuntary) and,
- Is not eligible for other coverage.
We need you to identify those who meet the first requirement. The former employee will determine if they meet the second.
Access former employee report in SIMON
Review the list of former employees located in SIMON under Resources, document & links. The document is titled COBRA subsidy – Employee list. If you don’t
see this report in SIMON, you do not have any terminations to review and you are done. Once you open the document you will need to save it to your computer (any updates you make will not update the existing document in SIMON). In column E indicate
if they are ARPA subsidy eligible (Y) or not (N). When you are complete:
- Upload the document into SIMON from the documents & links page. The Upload Documents option is in the upper right corner of the documents & links page.
If you prefer, use one of these methods instead:
- Secure email the spreadsheet back to Trust staff using the send secure email option on our website, or by using this secure email link to securely email Trust staff.
- Print the spreadsheet and fax to Trust staff at 1.360.753.0149.
- Or, call Trust staff with their status and we will update the document.
Questions?
Contact Trust staff at benefitinfo@awcnet.org or call us at 1.800.562.8981 with questions. Thank you for your help to ensure these former employees can access their federal
COBRA subsidy.
March 30 update
On March 11, President Biden signed into law the American Rescue Plan (ARP) Act. These two provisions impact benefits:
100% COBRA subsidies
Temporary COBRA subsidies will be available to former employees who are considered an Assistance Eligible Individual (AEI). The AWC Trust plans to cover the cost of the subsidy and procure the tax credit. The subsidy is currently scheduled to last from
April 1 through September 30, 2021.
An AEI is a former employee who:
- Experienced a COBRA qualifying event due to an involuntary termination or a reduction in hours (voluntary or involuntary) and,
- Is not eligible for other coverage (including Medicare).
What has been done so far?
We need you to identify AEI’s, leave the rest to us
If you are entering employee terminations in SIMON, be sure to use End of employment – Involuntary or Reduction of hours to identify
those eligible for the subsidy. While we look to you to identify the reason for the termination, we will look to former employees to identify if they are eligible for other coverage.
Questions? Contact Trust staff
Qualified COBRA beneficiaries, employees being terminated from your health coverage, or former employees on COBRA may have questions. Any questions can be directed to Trust staff at 1.800.562.8981 or
benefitinfo@awcnet.org.
Increase to the maximum contribution for dependent care assistance programs
The ARP allows (this is not mandatory) for a temporary increase from $5,000 to $10,500 and from $2,500 to $5,250 in the case of a separate return filed by a married individual. The temporary increase to the maximum contribution applies
only to the taxable year beginning after December 31, 2020 and before January 1, 2022 (i.e., the 2021 calendar year for most plans).
Additional action required
If you are covered under Navia Benefit Solutions through the AWC Trust, you received a direct communication with instructions the week of March 22. You will need to adopt an amendment in order to provide
this increased coverage and complete this form. Note, employers
will want to review previous nondiscrimination testing results to determine whether an increase in the amount of dependent care assistance will impact that analysis for 2021.
Questions?
If you have questions on either of these ARP provisions, contact Trust staff at benefitinfo@awcnet.org.
COBRA subsidies
The American Rescue Plan Act (ARP) provides for federal subsidies of COBRA continuation coverage premiums for certain “assistance eligible individuals” (defined below) whose COBRA maximum coverage period overlaps with the 6-month window running
from April 1, 2021 through September 30, 2021. Below is an overview of the COBRA subsidy requirements. We will continue to keep you updated as additional guidance is provided by the U.S. Department of Labor (DOL) and Internal Revenue Service
(IRS).
Assistance eligible individuals
Under the ARP, temporary COBRA subsidies are available to “assistance eligible individuals” or “AEIs”, generally defined as employees who are involuntarily terminated (other
than for gross misconduct) or who have a reduction in hours. COBRA subsidies are not available to any other qualified beneficiaries who have a COBRA event, nor are COBRA subsidies available to individuals who become eligible for other group health
plan coverage or for Medicare. The subsidy also is not available for continued coverage for health care FSAs.
The subsidies are available to AEIs who are entitled to (or become newly entitled to) and timely elect COBRA with coverage occurring at any time during the 6-month subsidy window.
The subsidies are also available to AEIs who failed to make a timely election for COBRA but whose coverage would have been in effect on April 1, 2021, as well as to AEIs who had timely elected but then dropped COBRA if their coverage would have been in
effect on April 1, 2021. Under the ARP, these individuals must be provided a new election opportunity, referred to as an “extended election period”. To be reinstated onto COBRA to receive the subsidies, they must make an election within
60 days of their receipt of a special election notice.
Amount and duration
The subsidy amount is 100% of the total cost of COBRA coverage (employee and covered dependents, including the up-to-2% permitted administrative fees) and is available from April 1, 2021 through September 30,
2021. The subsidy may end earlier if the individual’s COBRA continuation period ends earlier than September 30, 2021. It also will end if the individual becomes eligible for other group health plan coverage or Medicare.
Reimbursement
Generally, under the ARP, the entity to whom COBRA premium payments are due is responsible for covering COBRA premium costs upfront and then seeking the tax credit from the federal government afterward. The responsible
entity depends on the type of plan and how the plan is funded. We are awaiting guidance from the IRS regarding the credit and refund process. However, as you know, for members participating in the Trust, the Trust is the entity to whom the COBRA premium
is due.; Accordingly, at this time, the AWC Trust is covering COBRA subsidy costs and will seek the tax credit for any AEIs covered on an AWC Employee Benefit Trust plan.
Different coverage options
The ARP permits, but does not require, employers or plans to allow an AEI to enroll in a different, less expensive coverage option than the individual had at the time of their qualifying event. The AWC
Trust has made the administrative decision to not allow any changes in coverage.
Notice requirements
The AWC Trust is working with our COBRA administrator to provide the notices that are required under the ARP, as outlined below:
- A notice will be sent to those who become eligible to elect COBRA during the period between April 1, 2021 and September 30, 2021. The notice will include information regarding the ARP COBRA subsidies. We will use the model notice provided by the DOL.
- A notice will be sent by May 31, 2021 to AEIs who are eligible for the extended election period, as described above. We will use the model notice provided by the DOL.
- A notice that the subsidy is expiring will be provided between 45 and 15 days prior to when the subsidy will expire. The notice will include information regarding the expiration of the subsidy and the expiration date. This notice is not required for
individuals who became eligible for coverage under another group health plan or Medicare. We will use the model notice provided by the DOL.
Those employers with employees who have coverage outside of the AWC Trust should consult their COBRA administrators regarding what the administrators will help provide. Failure to meet the ARP notice requirements is a violation of COBRA’s notice
requirements under ERISA, the Internal Revenue Code, and the Public Health Services Act.
Individuals receiving COBRA premium assistance also have notice obligations. These individuals must notify the plan if they are no longer eligible for the subsidy because they become eligible for another group health plan or Medicare. Further details
regarding when and how to notify the plan will be provided by the DOL.