American Rescue Plan Act of 2021: Key Employer Provisions
by Vita, on March 11, 2021
The bill itself is 591 pages long with a Table of Contents that is seven pages long! It includes a plethora of relief measures that impact nearly every segment of society. Importantly, there are also critical measures in the bill that impact employers and their employee benefit programs. Following is a summary that highlights the key provisions that affect employee benefit plans.
Eligible individuals are those whose Qualifying Event was a termination of employment (other than for gross misconduct) or a reduction in hours. If the event is a Termination, it must be an involuntary termination of employment. Individuals must have active COBRA coverage (or be eligible to elect COBRA coverage) on or after April 1, 2021.
Coverages Included: The law refers to “any premium” and does not make an expressed differentiation between medical plan coverage and other health plan coverages that are subject to COBRA. Therefore medical, dental, vision, and EAP premiums would be subsidized. FSA plans are not subsidized.
: Notably, the extended election period provision creates an important deviation from the general COBRA rule that coverage needs to be continuous. In this case, an individual could “jump back on” to COBRA coverage as of April 1, 2021 without coverage being retroactive and without having to pay retroactive premiums.
All Qualified Beneficiaries who were covered at the time of the original Qualifying Event would be eligible to elect coverage under the extended election period. This is true regardless of whether all, some, or none of them had actually elected COBRA coverage at the time of the initial Qualifying Event and/or whether any of them were still covered as of April 1, 2021. As an example, if an employee had family coverage in place at the time of the Qualifying Event and elected employee only coverage under COBRA, all of the other family members would have a right to elect coverage under this new extended election period.
: If an assistance-eligible individual becomes eligible (just eligible, not actually covered) under any of the following plans, the subsidy ends.
- Any other group health plan (other than excepted benefits, health FSA, or QSEHRA coverage)
To underscore, if a Qualified Beneficiary is eligible for another employer’s group health plan or a spouse’s group health plan, they would not be eligible for the subsidy. From an administration point of view, this will likely require a monthly attestation on the part of the assistance-eligible individual that they have not become eligible for any of the prohibited coverages.
Lastly, if a Qualified Beneficiary reaches their COBRA maximum coverage period while in the subsidy period, the subsidy will end. In other words, the existence of the subsidy does not change the maximum duration of COBRA.
Plan Change Opportunity: The law allows assistance-eligible Qualified Beneficiaries to enroll in a different employer-sponsored plan provided:
- The employer elects to permit such change in enrollment.
- The new premium does not exceed the premium of the original plan at the time of the qualifying event.
- The different coverage is also offered to similarly situated active employees.
- The different coverage does not consist of: excepted benefits only (such as dental and vision), QSEHRA coverage, or an FSA.
Ultimately, this provision allows employers to effectively offer a plan change opportunity for assistance-eligible individuals. Notably, this would not be a true open enrollment where someone could add dependents to their COBRA coverage. Rather, it would be an opportunity for a QB to change coverage from, say, a PPO plan to an HMO plan. If offering the plan change opportunity is desired, employers should confirm it will be allowed by their insurance carriers/contracts.
Decision Point: Employers will need to decide whether to offer this flexibility or not.
mployers may amend plans for 2021 retroactively.
, 10-day limit on the amount of qualified sick leave wages with respect to each employee.
The bill includes a host of other provisions to benefit individuals and businesses. Following is a very high-level summary of some of the other key provisions:
- Vaccines: Resources and support for COVID-19 vaccine manufacturing, distribution,
- dditional PPP funding and an expansion of the program to include
- bridge shortfalls in state and local governments’ budgets and to support school re-openings.
- C . SBA assistance for restaurants, bars, and shuttered venue operators.