American Rescue Plan Act (ARPA) | FAQ

On March 11, 2021, a $1.9 trillion relief bill commonly referred to as The American Rescue Plan Act of 2021 (ARPA) was signed into law to provide relief in many forms, including COBRA subsidies, a second election period, and an increase in dependent care assistance.

PacificSource has created the following FAQ to address the current interpretation of ARPA. Because information is subject to updates and complexities may apply to your unique situation, clients are advised to seek legal or tax consultation for additional guidance.

COBRA/State Continuation Assistance

From April 1 through September 30, 2021, employees with an involuntary termination or reduction of hours will be eligible to receive a 100% subsidy of health insurance premiums under COBRA and State Continuation. This allows unemployed individuals (and their spouses and dependent children) to continue employer-sponsored coverage after losing employment without having to contribute toward any portion of their premiums (April through September 2021).

The U.S. Department of Labor published the election model notices on April 7, 2021. Eligible members of the plan subsidy must be notified by May 31, 2021, in accordance with the ARPA rules.

In addition, eligible members must receive a notice of expiration of premium assistance 45 days before the date of expiration. The notice is not required if coverage ends due to exhaustion of COBRA/State Continuation or eligibility for other coverage before the assistance period ends. The U.S. Department of Labor expects to publish a related model notice by May 15, 2021.

An individual or dependent who is eligible for support—recognized as an assistance-eligible individual (AEI)—qualifies for assistance because of a reduction in hours or involuntary termination of employment (excluding gross misconduct).

An assistance-eligible individual (AEI) may have 100% of COBRA or State Continuation premiums paid for a period of up to six months beginning April 1, 2021. This includes the 2% administrative fee, if applicable.

Yes, the premium assistance applies to all federally recognized dependent coverage.

The period of eligibility includes assistance-eligible individuals who would still be within their maximum COBRA or State Continuation period regardless of status.

Premium assistance applies to medical, dental, vision. Healthcare flexible spending accounts do not apply.

Those who are not eligible include employees who are eligible for other group health coverage, are eligible for Medicare, or have voluntarily terminated their employment.

No, the American Rescue Plan Act (ARPA) does not extend the length of COBRA/State Continuation coverage.

The extension period for COBRA is up to 18 months.

State Continuation eligibility periods vary by state:

  • Oregon is up to 9 months
  • Washington is up to 3 months
  • Montana – not applicable
  • Idaho – not applicable

You’ll find the Attestation of Eligibility form in our Documents and Forms library. We have added custom fields that allow the group administrator to customize the mailing address for submission.

Second Election Period & Timing Considerations

If an individual did not previously elect COBRA/State Continuation, or elected and discontinued coverage prior to April 1, 2021, they will have a new 60-day election period starting on the date that the notice is generated to the individual.

Here are a few examples to help clarify:

COBRA Example 1:

  • Qualified Beneficiary involuntarily terminated April 15, 2020
  • COBRA offer extended for a May 1, 2020, effective date and remains active
  • COBRA last date of coverage Oct. 31, 2021 (18 months)

Upon notification of eligibility, this individual is granted a second election and could choose to elect coverage effective April 1, 2021, or simply elect to receive the subsidy.

COBRA Example 2:

  • Qualified Beneficiary involuntarily terminated April 15, 2020
  • COBRA offer extended for a May 1, 2020, effective date
  • COBRA terminated Oct. 31, 2020

Upon notification of eligibility, this individual is granted a second election and could choose to elect coverage effective April 1, 2021.

State Continuation Example 1 (Oregon)

  • Qualified Beneficiary involuntarily terminated Dec. 31, 2020
  • Continuation offer extended for a Jan. 1, 2021, effective date
  • Continuation last date of coverage Sept. 30, 2021 (9 months)

Upon notification of eligibility, this individual is granted a second election and could choose to elect coverage effective April 1, 2021, and receive subsidy through Sept. 30, 2021.

State Continuation Example 2 (Washington)

  • Qualified Beneficiary involuntarily terminated Feb. 20, 2021
  • Continuation offer extended for a March 1, 2021, effective date
  • Continuation last date of coverage May 31, 2021 (3 months)

Upon notification of eligibility, this individual is granted a second election and could choose to elect coverage effective April 1, 2021, and receive subsidy through May 31, 2021. This person isn’t eligible for six months of subsidy because the continuation coverage ended on May 31, 2021.

Employers determine eligibility. Individuals who experienced a qualifying event due to involuntary termination or reduction of hours need to be sent initial second election notices. These notices need to be sent by your company or your COBRA administrator by May 31, 2021.

For COBRA (through fully insured and self-funded clients): Once the member election and attestation is received from the group or COBRA administrator:

  1. Employers that manage COBRA administration will remit premiums to PacificSource.
  2. Employers that have a COBRA administrator will be billed by the COBRA administrator for the premiums; the premiums will then be sent to PacificSource.

For State Continuation: Once member election and attestation is received from the employer, PacificSource will post a payment to credit the subsidized premiums.

PacificSource will refund the employer group or the COBRA administrator within 30 days of determined eligibility for premium assistance.

You can download the model election notices from the U.S. Dept. of Labor website:

COBRA (PDF)

State Continuation (PDF)

Please contact your employer or insurance agent for an Attestation of Eligibility form.