June 18, 2024
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The American Rescue Plan Act

The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021. The act includes a 100% COBRA (Consolidated Omnibus Budget Reconciliation Act) subsidy available to assistance-eligible individuals (AEIs) who are COBRA-qualified beneficiaries (QBs) because of an involuntary termination of employment or a reduction in hours for the period of April 1, 2021 through September 30, 2021.

Employers are eligible to recover the cost of the subsidy as a payroll tax credit. It is assumed that more information on the payroll tax credit is anticipated in future IRS guidance. New notifications are needed with the first compliance date of May 31, 2021.

The U.S. Department of Labor released model notices to meet this requirement, which can be found at www.dol.gov/cobra-subsidy

Step-by-Step Guidance for Employers

Identify eligible AEIs by looking back to individuals who would have been COBRA eligible beginning on or after November 1, 2019, due to a reduction in hours or involuntary termination of employment.

Work with COBRA vendors, if applicable, to coordinate a plan.

The first deadline is May 31, 2021. The Notice of Extended COBRA Election Period must have been issued to all AEIs with a qualifying event before April 1, 2021. Make sure to include the Summary of COBRA Premium Assistance Provisions under ARP.

Update COBRA election notices to reflect the model Notice’s subsidy language for new COBRA events between April 1, 2021 and September 30, 2021. Make sure to include the Summary of COBRA Premium Assistance Provisions under ARP.

Ensure the vendors are prepared to issue subsidy expiration notices.

Discuss what to do if COBRA premiums are received from AEIs for the months April–September 2021, and whether a refund or credit may be necessary.

Prepare how to respond in the event you (or the COBRA vendor) receive a “Request for Treatment as an Assistance Eligible Individual.”

Discuss tax credits with payroll departments and tax advisers.

Await further guidance and consider reviewing the 2009 guidance for direction.

It is expected that the IRS will also issue guidance, including information for employers to claim the payroll tax credit associated with the COBRA subsidy.

Open Enrollment Deadline Extended

It is clear that the COVID-19 pandemic affected so many people with changed laws and extended deadlines. This year Open Enrollment was extended to February 28 and then was extended to May 17, but now the deadline has been extended one more time.

The deadline to enroll for individuals who buy their own health insurance policies through the Affordable Care Act has been extended through the end of the year. As you may already know, this year New Jersey began operating its own marketplace for policies to be purchased through the Affordable Care Act, replacing Healthcare.gov. New Jersey’s new marketplace is called GetCoveredNJ.

Governor Phil Murphy extended the special enrollment period for coverage through GetCovered.NJ.gov, from May 15 to December 31, to let consumers take advantage of the American Rescue Plan changes.

The federal law that passed earlier in March provides additional subsidies to reduce health insurance premiums. The American Rescue Plan also raises the income eligibility for financial assistance. It includes new subsidies that lower premiums for anyone who receives unemployment insurance in any week of 2021. Additionally, it will cover COBRA premiums from March through September for certain individuals who wish to extend their job-based coverage after an involuntary job loss.

Cosmo is your preferred local assistance for GetCoveredNJ. There is an array of fantastic individual health care options available from various reputable carriers. We at Cosmo know these options inside-out and will guide you towards the best one for you.

Just give Cosmo Insurance Agency a call. We will simplify the process for you!

Mark Herschlag is CEO of Cosmo Insurance Agency, which is based in Ocean County. Cosmo Insurance Agency offers personalized solutions for individuals and businesses looking to obtain health, life, dental, long-term care or disability insurance. For more information or for a free, no-obligation quote, please call (201) 817-1388 or email [email protected].

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