If HealthEquity is your COBRA administrator, you recently received two communications regarding the newly introduced COBRA subsidy under the American Rescue Plan Act (“ARPA”). ARPA provides a 100 percent premium subsidy – between April 1, 2021 and September 30, 2021 – for individuals whose reduction in hours or involuntary termination of employment makes them eligible for COBRA continuation coverage during this period (“Assistance Eligible Individuals” or “AEIs”).
HealthEquity can help you navigate these new federal requirements.
HealthEquity has a special offer to assist you in determining who your AEIs are and to provide special notices in compliance with ARPA. All COBRA election notices sent between April 1st and September 30th will include information related to the subsidy (no additional fees apply for the insertion of this COBRA subsidy information as part of the election notice mailing).
In addition, ARPA requires that special notices be issued to (a) AEIs who became entitled to elect COBRA before April 1, 2021 and to (b) AEIs who (1) do not have a COBRA election in effect on April 1, 2021 and (2) who previously elected COBRA coverage but are no longer enrolled as of April 1, 2021. Furthermore, ARPA requires plan administrators to inform AEIs when their COBRA subsidy will expire (between 15-45 days before the subsidy expiration date). HealthEquity can send the special subsidy notices on your behalf for the additional fees outlined in their communication to you. HealthEquity will bill these additional fees directly to you if you choose to opt in.
What happens if you do not opt in?
If you opt out of HealthEquity’s add-on service related to ARPA COBRA requirements, it will be your responsibility to manage all aspects of the ARPA COBRA subsidy compliance on your own which includes, among other responsibilities, sending both special notices and communicating elections and subsidy eligibility to HealthEquity for individuals who experienced a qualifying event prior to April 1st. HealthEquity will work directly with clients who opt out to provide additional details on how to manually submit the details of an Assistance Eligible Individual’s COBRA election. It is important to note that COBRA notice penalties (and COBRA excise tax penalties) may be assessed against a plan administrator that fails to provide ARPA-required notices on time. Subsidy eligibility will be applied on a prospective basis for all clients. Note that the deadline to send the special election notice to AEIs who will have a second chance to elect COBRA is May 31, 2021.
How can ADP help?
If you historically distinguished between voluntary and involuntary terminations in the Termination Wizard in ADP Workforce Now, a custom report can be run to provide you with a list of individuals whose terminations were identified as involuntary. The report can be used to assist you in verifying subsidy eligibility based on how you have identified terminations in Workforce Now, provided you used this functionality during the applicable date range. Please contact your dedicated Service Team for assistance with running this report.
In order for ADP to accurately and timely communicate the subsidy eligibility of a terminated employee to HealthEquity on a go-forward basis, you must indicate whether the termination is “voluntary” or “involuntary” in the ADP Workforce Now Termination Wizard. Please note that this is not a required field and it will be your responsibility to ensure that it is completed. Failure to appropriately designate a termination as “voluntary” will result in the automatic application of the subsidy for ALL qualified beneficiaries who experience a termination between April 12th and September 30th.
ADP is a third party administrator and cannot provide legal advice or guidance. We recommend you consult with legal counsel if you have questions about who is an Assistance Eligible Individual as defined by ARPA. For questions related to notice requirements and ongoing COBRA administration, please contact your COBRA administrator. The Department of Labor has also published FAQs related to the COBRA Subsidy. You can find the FAQs and the new model notices here.