On March 11, President Biden signed the American Rescue Plan Act (ARPA), which features a number of exciting healthcare provisions, including COBRA subsidies, an extension of the new Special Enrollment Period that began in March and an increase in Dependent Care FSA maximums. While individual states are still determining the best way to put this new healthcare legislation into action, here is what we know so far.
COBRA Premium Subsidies
ARPA provides full COBRA premium subsidies for eligible individuals from April 1, 2021 through September 30, 2021. This means that as long as qualified individuals are enrolled in COBRA by April 1 or elect COBRA coverage within the window for subsidies, the subsidies will cover 100% of the cost of COBRA. To qualify for these subsidies, individuals must have experienced either (1) an involuntary termination of work, such as being fired or let go, or (2) a reduction in work hours, and thee events do not have to be COVID-19 related To those who voluntarily end their employment or experience other COBRA-qualifying events do not qualify for the COBRA subsidies.
ARPA SEP Extended
ARPA also created an extension of the Special Enrollment Period that went into effect in February 2021. The new Special Enrollment Period will extend to August 15, 2021, allowing more individuals to enroll in Marketplace coverage and allowing those already enrolled to change plans due to increased tax credits that ARPA has made available.
ARPA has also created another Special Enrollment Period specifically for Assistance Eligible Individuals (AEIs). These are qualified beneficiaries who are eligible for COBRA coverage due to an involuntary termination of work or a reduction in work hours. (These events are not required to be caused by COVID-19 in order for an individual to qualify.) This new Special Enrollment Period began April 1 and will run until 60 days after the qualified individual receives written notice that they are eligible to elect COBRA coverage.
Dependent Care Increase
ARPA has significantly increased the Child and Dependent Care Tax Credit (CDCTC) and the amount households can exclude from taxable income for Dependent Care Assistance Programs (DCAP). The new relief act more than doubles these amounts. The maximum contributions for DCAPs have increased to $10,500 for married couples filing jointly or $5250 for individuals or married couples filing separately.
FAQs Regarding ARPA of 2021
- Are all COBRA-standard Qualifying Events (QEs) eligible for the ARPA Subsidy?
- Does the QE have to be COVID-related to qualify for the ARPA Subsidy?
- Are the dependents of an AEI also eligible for the ARPA Subsidy?
For your convenience, we have included a list of these and other common ARPA COBRA subsidy FAQs on our blog.
Let's Get the Ball Rolling!
The act will also provide credits of up to 50% of childcare expenses to a maximum of $8,000 for households with one child and $16,000 for households with two or more children. These increased benefits will be in effect from January 1, 2021 to December 31, 2021.
All of the new changes that ARPA has put in place make this the perfect time to take advantage of the extended SEP or set up COBRA and FSA accounts with us if you don’t have them yet. Comparative Solutions is a one-stop shop. From verifying eligibility and handling reimbursement claims to providing notices and keeping records, we will manage the details and keep everyone in compliance. We handle benefits administration so that employees can make the most of these new provisions and employers can focus on managing their businesses. In addition to COBRA and FSA administration, we also provide HRA, HSA, and Commuter benefits. Whatever you're looking for, we've got you covered. Contact Comparative Solutions today to get the ball rolling!
