Federal COBRA Premium Assistance April 1 - September 30, 2021

May 6, 2021

To: Department Benefits Representatives (DBRs)
From:  HR Benefits Office on behalf of UCOP
Re :  COBRA Provisions of the American Rescue Plan Act of 2021

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARP), the latest federal COVID-19 relief bill. The law includes a mandate for employers to subsidize COBRA continuation coverage, allow COBRA-eligible individuals to enroll in continuation coverage, and provide, at the employer’s discretion, the opportunity to switch health plans. UCOP is still working on implementing these new processes, but wanted to share how these pandemic relief provisions will work.

COBRA Subsidy

Individuals may be eligible for full subsidization of their COBRA premium if they are eligible for and elect COBRA continuation coverage due to a UC employee reduction in hours or an involuntary termination from employment. The subsidy will apply to the (former) UC employee and their family members covered under UC plans. The subsidy, referred to as “premium assistance” by the federal government, is available for periods of coverage from April 1, 2021 through September 30, 2021. Premium assistance is available for continuation coverage under the Federal COBRA provisions, as well as for group health insurance coverage under Cal-COBRA.

Premium assistance is available for “Assistance Eligible Individuals” who are COBRA qualified beneficiaries and meet the following requirements between April 1, 2021 and September 30, 2021:

         ·         Eligible for COBRA continuation coverage due to a qualifying event that is a reduction in hours or an involuntary termination of employment (not including a voluntary termination);

         ·         Elect COBRA continuation coverage

         ·         Ineligible for other group health coverage, (i.e., a new employer’s plan or a spouse’s plan)

         ·         Ineligible for Medicare

The subsidy applies to medical, dental and/or vision coverage in which a COBRA participant is enrolled; it does not apply to Health FSA continuation. 

The determination of whether a termination is involuntary, making the individual eligible for a subsidy, will be based on the “Termination Action Reason” code in UCPath. For example, terminations due to resignation, retirement or participation in a voluntary separation program are not considered involuntary, but medical separation and the end of contract appointment are considered involuntary. If the employee’s termination was due to gross misconduct, the employee and any dependents would not qualify for COBRA continuation coverage or the premium assistance. 

A UC employee who loses eligibility for a higher health benefit package due to a reduction in hours may be eligible for COBRA continuation coverage with a subsidy. This would apply if, for example, an employee with Full benefits enrolled in UC Care is moved to Core benefits as a result of the reduction in time. The employee is only eligible for COBRA where a reduction in benefits occurs; for example, if that employee was enrolled in CORE medical instead of UC Care prior to the reduction in hours, they would only be eligible for COBRA continuation of dental and vision coverage. 

Note that if a person has individual health insurance coverage, such as a plan through Covered California or the Health Insurance Marketplace of another state, or Medicaid, they may be eligible for ARP premium assistance. However, if they elect to enroll in COBRA continuation coverage with premium assistance, they will no longer be eligible for the premium tax credit, advance payments of the premium tax credit, or the health insurance tax credit provided by the Affordable Care Act. 

Premium assistance can last from April 1, 2021 through September 30, 2021. However, it will end earlier if the COBRA participant:

         ·         Becomes eligible for another group health plan, such as a plan sponsored by a new employer or a spouse’s employer

         ·         Becomes eligible for Medicare

         ·         Reaches the end of the maximum COBRA continuation coverage period.

Once eligibility for a subsidy is determined, any premiums that were already paid to WEX will be applied to months after the subsidy end date. For example, if April 2021 premium payment has been paid, once the subsidy has been applied the premium payment previously applied to April will automatically be applied to October 2021. If the participant cancels coverage or reaches the end of their COBRA period prior to September 30, 2021 and has a credit on their account, WEX will automatically refund the credit amount after the participant’s COBRA is terminated.

Individuals choosing to continue COBRA continuation coverage after the premium assistance period ends must pay the full amount of the premium.

In the case of a UC employee who lost eligibility for a higher benefit package due to a reduction in hours and elected COBRA continuation (such as in the example above), if the employee drops COBRA coverage at the end of the subsidy they would be placed back into the benefit level for which their appointment makes them eligible.

It is the responsibility of the COBRA participant to notify WEX if they become ineligible for the subsidy. Participants who do not notify the COBRA administrator of a change in status are subject to tax penalties.

Additional COBRA Enrollment Opportunity

If an individual was offered Federal COBRA continuation coverage as a result of a reduction in hours or an involuntary termination of employment, and they declined to take COBRA continuation coverage at that time, or they elected Federal COBRA continuation coverage and later discontinued it, they have another opportunity to elect COBRA continuation coverage and receive the premium assistance, if the maximum period they would have been eligible for COBRA continuation coverage has not yet expired.

Individuals eligible for this additional COBRA election period will receive a notice informing them of this opportunity. This notice will be provided within 60 days of the first day of the first month beginning after the date of the enactment of the ARP, that is, no later than May 31, 2021. Individuals have 60 days after the notice is provided to elect COBRA.

Individuals may begin their coverage prospectively from the date of their election, or, if an individual has a qualifying event on or before April 1, choose to start their coverage as of April 1, even if the individual receives an election notice and makes such election after April 1. In either case, note that the premium assistance is only available for periods of coverage from April 1, 2021 through September 30, 2021.

The additional enrollment opportunity does not apply to the Cal-COBRA coverage period; that is, an individual who would have been in the Cal-COBRA coverage period if they had not discontinued continuation coverage, or who did not continue coverage under Cal-COBRA after the end of the federal COBRA period, does not have a new enrollment opportunity.

Option to Change Health Plan(s)

UC has chosen to adopt the provision of the ARP that allows qualified beneficiaries to enroll in coverage that is different from the coverage they had at the time of the COBRA qualifying event, provided that:

         ·         The COBRA premium charged for the different coverage is the same or lower than for the coverage the individual had at the time of the qualifying event

         ·         The different coverage is also offered to similarly situated active employees; and

         ·         The different coverage is not a health FSA.

Eligible individuals will be notified by WEX and have 90 days to elect to change their coverage after the notice is provided.

The following chart indicates which medical plan changes are allowed:

For dental, PPO members can switch to the DHMO, but not vice versa. As you know, there is only one vision plan.

Process for Making Changes and Obtaining a Subsidy

WEX (formerly Discovery Benefits), the COBRA administrator for UC, will issue notices and forms to all individuals potentially eligible for these relief provisions, based on information provided by UC.

Individuals wishing to enroll in COBRA continuation, to change plans or to obtain a subsidy will need to complete a form and submit it to WEX by the deadline indicated on the form. Upon receipt of the form, WEX will verify eligibility for the subsidy and then send a letter to COBRA participants confirming they need not submit premium payments for coverage periods from April 1 through September 30, 2021 (or other range within those dates, depending on the individual’s COBRA period). UC will pay the premiums for the subsidized coverage months.

WEX will also issue notices to COBRA participants receiving a subsidy to alert them to the expiration of the subsidy. Once the subsidy is no longer available, participants will be required to resume paying premiums and will be subject to coverage cancellation if the plan premium is not paid in a timely manner. Note that participants will not be able to change plans after the subsidy expires (in the absence of a qualifying life event or Open Enrollment).

Copies of the notices and forms will be shared in another HRB memo, when they become available from WEX.

Additional Information

The federal government has published an FAQ document which you may find helpful.  Individuals with questions about the process or who believe they may be eligible for a subsidy and have not received a notice by mid-June should contact WEX at (844) 561-1338.