COBRA Premium Subsidy Response – American Rescue Plan Act

cobra premium subsidy

BASIC’s COBRA Premium Subsidy Response

On April 7, the U.S. Department of Labor (DOL) released the much-anticipated Model Notice for Assistance Eligible Individuals (AEIs). After reviewing the notice and additional guidance released alongside it, BASIC can now offer more information specific to how the American Rescue Plan Act (ARPA) impacts your COBRA/State Continuation plan and how we can help you comply with the provisions.

Please be aware any processes described or outlined below are subject to change pending further direction from official sources.

How BASIC Can Help

As your COBRA/State Continuation administrator, BASIC has you covered. Our Compliance team and legal counsel have thoroughly reviewed the ARPA provisions to determine the impact on our clients. With a legislative change of this magnitude, the list of considerations and processes affected is extensive.

We’re taking on the administrative burden and making it simple and straightforward for you to comply and minimize risk. Many of the notifications and communication required will be with participants, as the beneficiaries of the subsidy. When action is required on your part, we will let you know promptly.

To assist you with some common issues, we have collected a list of FAQs on our website.

For specific process information, please read below.

Administrative Changes

We are preparing our systems and notices, including the new Notice of Expiration of Premium Assistance.

We will be providing a report so clients can perform the necessary payroll adjustment to recoup subsidized premiums, as well as implementing a process to collect the 2% COBRA administration fee from clients.

  • Since BASIC will not be collecting premiums from AEIs, you will need to monitor activity and pay premiums to the applicable carrier(s). The subsidies are funded via a payroll tax credit, which you can claim to recoup these premium payments (including a 2% administrative fee charged by BASIC). You should consult with your payroll and tax advisors for further direction.

For clients new to BASIC since October 2019, we will be in contact with you to obtain information for participants who would not be in our systems (e.g., if the qualifying event predates the service agreement start date) as some may be AEIs under ARPA. Additional fees will apply.

Process Timeline

By May 31, BASIC will send the required ARPA notices and Request for Treatment as an Assistance Eligible Individual forms to participants with a qualifying event (QE) of either 1) reduction in hours or 2) termination of employment.

Please note, for a termination QE to confer AEI status, it must have been involuntary. While BASIC cannot make this determination, we will supply participants with information from the DOL defining an AEI (see FAQ, “Who qualifies?”). They will then need to determine based on those criteria if they would qualify for assistance, make their coverage selection, and return all forms to BASIC. This process may change pending further guidance from the DOL.

As we receive premium assistance attestations from participants requesting treatment as AEIs, we will automatically apply the subsidy in our systems and notify you (specifically, the primary COBRA/State Continuation plan contact on file).

  • If you agree that the participant is an AEI, no action is necessary.
  • If you disagree with the determination, you must inform BASIC within five business days. BASIC will remove the subsidy and communicate with the participant, who has an opportunity to dispute this with the DOL.

In the event an AEI paid for subsidized months of coverage, BASIC will coordinate refunds with the client.

BASIC will communicate with participants confirming the subsidy has been processed, and they can enjoy the subsidy through their end date. BASIC will send the Notice of Expiration of Premium Assistance within 15-45 days prior to the participants COBRA/State Continuation coverage end date.

Tools & Other Materials

In addition to our FAQs, we have built a calculator to help you determine the existing COBRA relief extensions under the Outbreak Period.

For more general information about the COBRA provisions in ARPA, the DOL has released their own set of FAQs.

BASIC COBRA Administration

See how BASIC COBRA Administration can take the frustration out of complying with ever-changing regulations.