The loss of health insurance benefits is one of the worst things about losing a job. Families often worry about how they will afford necessary medical treatment and pay for expensive prescription medications. This worry compounds the fears caused by the job loss.
Help is here.
The American Rescue Plan Act (“ARPA”) was signed into law on March 11, 2021, by President Joe Biden. This act offers eligible people who have lost a job a lifeline to receive health insurance benefits.
From April 1, 2021, through September 30, 2021, if an eligible employee chooses COBRA coverage, the former employer must pay the insurance premiums’ total cost. The government will reimburse the employer for this cost through payroll tax credits.
To be eligible, an employee must have been involuntarily terminated for reasons other than gross misconduct and (1) be already enrolled in Cobra, (2) elected Cobra initially but let the coverage lapse even though it would have extended beyond April 1, 2021, or (3) did not elect Cobra initially, but if he/she had done so, the coverage would have extended beyond April 1, 2021.
A former employee currently covered under any other group health plan or is Medicare eligible is not eligible for this benefit. Employees who resigned are also not eligible.
For employees who enrolled in COBRA coverage and were actively covered as of April 1, this should be simple. The company should pay the premiums for the next six months. However, because this is a very new law, we recommend that employees check with their insurance provider or the company’s Human Resources department to find out the logistics for handling the premiums.
For those former employees who did not initially elect COBRA coverage or who let COBRA coverage lapse, there will be a special enrollment period. They must be notified by their former employer or the insurance provider about their eligibility for this benefit and given a chance to elect to participate in COBRA coverage now. The special enrollment period begins on April 1 and ends 60 days after the delivery of the COBRA notification.
If you are eligible for this benefit and do not hear from your former employer soon, we recommend that you check with the company’s Human Resources department or the insurance carrier promptly to see when this notice will be sent.
This law was just signed three weeks ago. The Department of Labor has not yet drafted regulations and guidance for companies to implement this benefit. Because of that, expect some confusion as this law gets implemented. The rollout may not be seamless and smooth. Be prepared to be patient. We recommend that you communicate often with your former employer to make sure you get this benefit.
The American Rescue Plan Act should help provide healthcare access to so many families affected by job loss during the past year. Hopefully, the program rollout with be smooth, and kudos to President Biden and Congress for getting this done.