Customized Employee Benefit Plans



Updated 04-30-2021





The American Rescue Plan (ARP) Act of 2021
COBRA and State Continuation
Requirements for Employers





* The included information is our best understanding of the rules and regulations as they apply to Texas Employers. Regulations are established and governed by the Department of Labor. It is ultimately the employer's responsibility to comply with all State and Federal regulations. Please check back with this page periodically for updates.




The American Rescue Plan (ARP) Act of 2021 was signed into law on March 11th and establishes new rules surrounding COBRA and State Continuation. The DOL has placed the burden of educating former and current employees on the details of the ARP Act. Enrollment timetables, required notices and premium payments for former employees coverage will undergo temporary changes.


Employers must send new notifications to formerly covered employees who were newly eligible for continuation as far back as November 1st, 2019 due to being terminated involuntarily or having an involuntary reduction in hours. Former covered employees and covered dependents will be eligible to start an extended election period as early as April 1st 2021 with 100% Premium Assistance. This includes former employees and covered dependents who have elected, waived or previously dropped continuation of coverage. This excludes those who have exhausted their continuation period or are eligible for Medicaid, Medicare or other group coverage (including spousal coverage). The employer will be responsible for the cost of the continuation premium, but will get a tax credit on their Medicare Taxes for the premium amounts (including the additional 2% allowable Continuation Administration fee).


Current employees involuntarily losing their coverage between April 1st and September 30th 2021 must be provided notification of eligibility for the Premium Assistance.


The ARP Act provides 100% Premium Assistance for Assistance Eligible Individuals (AEIs) from April 1st through September 30th, 2021.





Small Group Self-Funded
(NO continuation) Employers





Employers with a Partially Self Funded plan, sometimes called Level Funded or Alternative Funded, who averaged less than 20 employees in the prior calendar year are not COBRA or Texas State Continuation eligible. Presently, there are no requirements under the ARP Act for these employers.


No Action Needed

Small Group Fully-Insured
(State Continuation) Employers





Fully Insured Employers that averaged less than 20 employees in the prior calendar year are subject to the Texas State Continuation. Click the button below for further instructions.


State Continuation Employer Action

COBRA Eligible Employer





Employers that averaged 20 or more employees in the prior calendar year are COBRA eligible. We encourage Employers using a COBRA Administrator to reach out to their administrators to be sure that they have all the employee information needed and that they are adhering to these new rules and timelines. Click the button below for further instructions.

COBRA Employer Action

SMALL GROUP FULLY-INSURED (State Continuation) EMPLOYERS



Group health plans subject to State Continuation are subject to the ARP’s (American Rescue Plan) premium assistance provisions, notice requirements and the additional election period.


Premium assistance helps Assistance Eligible Individuals (AEI’s) continue their health benefits without requirement to pay their State Continuation coverage premiums.


Assistance Eligible Individuals (AEIs) is an employee who is not eligible for other group coverage or Medicare and previously was involuntarily:

  • Terminated (Other than gross misconduct)
  • A reduction in hours where the employee remained employed at the time of reduction including:
    • ​Full-time to part-time status
    • Temporary leave of absence
    • Reduction of hours due to business hours of operation change
  • Participation in a lawful labor strike


The American Rescue Plan (ARP) applies to periods of health coverage on or after April 1, 2021 through September 30, 2021. In addition, the ARP provides an extended State Continuation election period to those who were previously eligible for State Continuation of Coverage between November 1, 2019 through March 30, 2021 and whose coverage would not have exhausted by April 1, 2021. The State Continuation premium assistance can begin as early as April 1, 2021 and will end as early as the State Continuation coverage period has ended or as late as September 30, 2021.


Employers should not collect premium payments from Assistance Eligible Individuals. Employers will be responsible for covering the premium and any 2% administrative fee for the period of coverage from April 1, 2021 through September 30, 2021. The premium will be reimbursed to the employer through a State Continuation premium assistance credit.


Assisted Eligible Individuals who are eligible to continue State Continuation after September 30, 2021 when the premium assistance ends, will be responsible to pay the full amount of premium otherwise due. AEI’s are eligible for Medicaid or a special enrollment period to enroll in individual coverage within or outside of the health Insurance marketplace at the end of their State Continuation or when the premium assistance ends, September 30, 2021.


Employers or multiemployer plans may be subject to an excise tax under the IRC (Internal Revenue code) if they fail to satisfy the State Continuation coverage requirements set forth. The tax could be as much as $100 per qualified beneficiary, but not more than $200 per family, for each day the taxpayer is in violation of the ARP rules.


To comply with the ARPA subsidies, employers can use the following model notices issued by the Department of Labor to hand out to “Assistance Eligible Individuals” (AEIs).


AEI’s between April 1, 2021 through September 30, 2021:

  • The ARP Act State Continuation of Coverage & Election Notice. Employers must provide this within 30 days of termination. Employees have 60 days to elect from the date they receive the notice.
  • Notice of Summary of the COBRA/State Continuation Premium Assistance Provisions under the American Rescue Act. This must be provided within 30 days of termination along with the traditional State Continuation of Coverage Notice and election material.
  • Notice of eligibility for other group insurance coverage or eligibility for Medicare. Employers must provide this within 30 days of termination and can be provided within the State Continuation Notice and election material. Qualified beneficiaries are required to provide this to the employer once they have become eligible for other group coverage or Medicare. Failure to do so can result in a tax penalty to the qualified beneficiary.
  • Model Notice of Expiration of Premium Assistance. Employers must provide this within 45-15 days of termination of the State Continuation Premium Assistance.


AEI’s between November 1, 2019 through March 30, 2021:

  • Notice of Summary of the State Continuation Premium Assistance Provisions under the American Rescue Act. Employers are required to provide this to AEI’s by May 31, 2021.
  • Notice of Extended Election Period to qualified beneficiaries who were State Continuation eligible between November 1, 2019 through March 30, 2021. This notice must be provided to AEI’s by May 31, 2021.
  • Notice of eligibility for other group insurance coverage or eligibility for Medicare. Employers must provide this notice to AEI’s by May 31, 2021. Qualified beneficiaries are required to provide this to the employer once they have become eligible for other group coverage or Medicare. Failure to do so can result in a tax penalty to the qualified beneficiary.
  • Model Notice of Expiration of Premium Assistance. Employers must provide this within 45-15 days of termination of the State Continuation Premium Assistance.



*For Additional information, please refer to the Department of Labor, Department of the Treasury and the Internal Revenue Service


State Continuation Notice
Summary of Premium Assistance
Notice of Extended Election Period
Notice of Eligibility of Other Coverage
Notice of Expiration
Notice Flowchart
FAQ

COBRA ELIGIBLE EMPLOYERS



Group health plans subject to COBRA Continuation are subject to the ARP’s (American Rescue Plan) premium assistance provisions, notice requirements and the additional election period.


Premium assistance helps Assistance Eligible Individuals (AEI’s) continue their health benefits without requirement to pay their State Continuation coverage premiums.

​

Assistance Eligible Individuals (AEIs) is an employee who is not eligible for other group coverage or Medicare and previously was involuntarily:​

  • Terminated (Other than gross misconduct)
  • A reduction in hours where the employee remained employed at the time of reduction including:
    • Full-time to part-time status
    • Temporary leave of absence
    • Reduction of hours due to business hours of operation change
  • Participation in a lawful labor strike

The American Rescue Plan (ARP) applies to periods of health coverage on or after April 1, 2021 through September 30, 2021. In addition, the ARP provides an extended COBRA election period to those who were previously eligible for COBRA Continuation of Coverage between November 1, 2019 through March 30, 2021 and whose coverage would not have exhausted by April 1, 2021. The COBRA premium assistance can begin as early as April 1, 2021 and will end as early as the COBRA coverage period has ended or as late as September 30, 2021.


Employers should not collect premium payments from Assistance Eligible Individuals. Employers will be responsible for covering the premium and any 2% administrative fee for the period of coverage from April 1, 2021 through September 30, 2021. The premium will be reimbursed to the employer through a COBRA premium assistance credit.


Assisted Eligible Individuals who are eligible to continue COBRA continuation after September 30, 2021 when the premium assistance ends, will be responsible to pay the full amount of premium otherwise due. AEI’s are eligible for Medicaid or a special enrollment period to enroll in individual coverage within or outside of the health Insurance marketplace at the end of their COBRA period or when the premium assistance ends, September 30, 2021.


Employers or multiemployer plans may be subject to an excise tax under the IRC (Internal Revenue code) if they fail to satisfy the COBRA continuation coverage requirements set forth. The tax could be as much as $100 per qualified beneficiary, but not more than $200 per family, for each day the taxpayer is in violation of the COBRA rules.


To comply with the ARPA subsidies, employers can use the following model notices issued by the Department of Labor to hand out to “Assistance Eligible Individuals” (AEIs).


AEI’s between April 1, 2021 through September 30, 2021:

  • The ARP Act COBRA Continuation of Coverage & Election Notice. Employers must provide this within 30 days of termination. Employees have 60 days to elect from the date they receive the notice.
  • Notice of Summary of the COBRA Premium Assistance Provisions under the American Rescue Act. This must be provided within 30 days of termination along with the traditional COBRA Continuation of Coverage Notice and election material.
  • Notice of eligibility for other group insurance coverage or eligibility for Medicare. Employers must provide this within 30 days of termination and can be provided within the COBRA Notice and election material. Qualified beneficiaries are required to provide this to the employer once they have become eligible for other group coverage or Medicare. Failure to do so can result in a tax penalty to the qualified beneficiary.
  • Model Notice of Expiration of Premium Assistance. Employers must provide this within 45-15 days of termination of the COBRA Premium Assistance.

AEI’s between November 1, 2019 through March 30, 2021:

  • Notice of Summary of the COBRA Premium Assistance Provisions under the American Rescue Act. Employers are required to provide this to AEI’s by May 31, 2021.
  • Notice of Extended Election Period to qualified beneficiaries who were COBRA Continuation eligible between November 1, 2019 through March 30, 2021. This notice must be provided to AEI’s by May 31, 2021.
  • Notice of eligibility for other group insurance coverage or eligibility for Medicare. Employers must provide this notice to AEI’s by May 31, 2021. Qualified beneficiaries are required to provide this to the employer once they have become eligible for other group coverage or Medicare. Failure to do so can result in a tax penalty to the qualified beneficiary.
  • Model Notice of Expiration of Premium Assistance. Employers must provide this within 45-15 days of termination of the COBRA Premium Assistance.


*For Additional information, please refer to the Department of Labor, Department of the Treasury and the Internal Revenue Service


COBRA Continuation Notice and Election Form
Summary of Premium Assistance
Notice of Extended Election Period
Notice of Eligibility
Notice of Expiration
Notice Flowchart
FAQ

COVID-19 Vaccine Employer Paid Leave Tax Credit



Employer Paid Leave Tax Credit Opportunity – Granted April 1, 2021 through September 30, 2021

As part of the American Rescue Plan (ARPA) Act that was passed on March, 2021 a new employer tax credit has been announced by the White House to help employers encourage and incentivize employees to get the COVID-19 vaccination.


This new provision (Paid Leave Tax Credit) applies to employers who have less than 500 employees, including tax-exempt organizations. Self-employed individuals are also eligible for a “similar tax credit.”


Employers can incentivize employees to get the COVID-19 vaccination through Paid Time Off (PTO) for:


  • Employees to go get the shot(s) and
  • Employees who need necessary recovery time after receiving the COVID-19 shot(s)

Tax Credit for Paid sick leave can be claimed by eligible employers that offer up to 80 hours (10 workdays), limited to $511 per day (and $5,110 total, at 100% of their regular rate of pay) to each employee who elects to receive a COVID-19-vaccine.


Tax Credit for Paid Family leave wages is equivalent to family leave wages paid for up to 12 weeks, limited to $200 per day and $12,000 total (at two-thirds the employee’s regular rate of pay).


Eligible employers can claim the sick and family leave paid Tax Credit through their quarterly 941. The IRS did state that the paid leave credits are tax credits against the employer’s share of the Medicare tax.


IRS Fact Sheet
DOL Employer Paid Leave Requirements

105 E. Main St.


Bullard, TX 75757





Customized Employee Benefit Plans



(903) 710-2232
gene@customizedbenefitplans.com