The American Rescue Plan (ARPA): BASIC’s Response

HOW BASIC IS RESPONDING

For the sake of consistency with our response to previous relief bills, BASIC will take a proactive approach to the DCFSA provision and automatically apply it to all existing DCFSA plans. Plus, since this provision is a “no-brainer” for an employer to adopt, a proactive approach is more practical than asking 3,000 DCFSA clients to contact us with an adoption request. Per our previous responses, we will offer clients the ability to OPT OUT of the automatic adoption of this DCFSA provision or request a custom cap (up to $10,500) by completing the opt-out form by April 1 (DCFSA plans will be updated in our system shortly after). Amendments will be completed and distributed this summer (along with the CAA adoptions, where applicable). BASIC’s Consumer Driven Accounts system is ready to administer these new provisions for employers. To learn more about BASIC’s CDA services, click here!

PROVISION 2: Extended Subsidies for COBRA Premiums

This ARPA provision allows Assistance Eligible Individuals (AEIs) who lost health coverage (including dental and vision coverage) due to their or their family member’s involuntary termination or reduction in hours to receive COBRA coverage with a premium reduction of 100% from April 1, 2021 through September 30, 2021.

Allowances for Individuals/Employees

• If an AEI already elected COBRA, they have 100% subsidized continuation starting on April 1, 2021.
• If an AEI did not make any election yet, they must be given the opportunity to make an election during a new extended lookback election period which ends 60 days after they are notified. They can elect starting April 1, 2021 and can enjoy the subsidy until the end of their original COBRA time frame or September 30, 2021, whichever comes first.
• If an AEI elected coverage and then dropped, they must be given an opportunity to elect coverage, provided they are still within the 18-month COBRA time frame.
• If an AEI becomes eligible for COBRA starting April 1, 2021 or later, they are eligible for the subsidy starting on April 1, 2021.

Allowances for Clients/Employers

• The employer or carrier will be reimbursed 100% of the total COBRA premium (102% of the actual cost) by a credit against payroll taxes or as a refund of an overpayment.

• A plan may but is not required to permit AEIs to elect different coverage if they also allow their current employees this option. AEIs would have 90 days after notice of the option to make the election. The different coverage cost must be less than the existing plan for the AEI.

Required COBRA Notifications & Dates

1. AEIs must be provided a Notice informing them of the availability of the subsidy and the special enrollment period to be delivered by May 31, 2021.
   1. The DOL will provide a model notice template for the Notice no later than April 10, 2021.
2. A Notice of subsidy expiration must be sent between 15 and 45 days before the end of the period.
   1. The DOL will provide a model notice template for the Notice within the next 6 weeks.

IMPORTANT CONSIDERATIONS:

There are several legislative changes that affect COBRA in addition to the American Rescue Plan Act that employers must navigate and take into consideration, which include:

• IRS Notice 2021-15 (regarding the Consolidated Appropriations Act)
• Disaster Relief Notice 2021-01
• And more coming!

HOW BASIC IS RESPONDING

BASIC will provide the following services for all COBRA clients (new and existing): We will ensure compliance with all COBRA notification requirements, as mentioned above We will assist the employer with determining AEIs by providing reports We will likely bill the client for the 2% admin fee (TBD) BASIC COBRA can help your clients comply with all regulations and requirements. If you’re interested in learning more about BASIC COBRA, click here!

PROVISION 3: FMLA – Extended Tax Credits for Employers

The ARPA extends the Families First Coronavirus Response Act (FFCRA) employer payroll tax credits for paid sick and paid family leave for six (6) months from March 31, 2021 through September 30, 2021. It also adds additional qualifying reasons for employees to take the paid leaves:

• The employee obtains immunization related to COVID-19
• The employee is recovering from a condition, illness, or disability related to the vaccination
• The employee is seeking or awaiting the results of a COVID-19 test or diagnosis (including where the employer has requested the test or diagnosis)

ARPA resets the limit on the tax credit available for Emergency Paid Sick Leave (EPSL) and paid family leave (EFMLA) as of April 1, 2021.

Employers may voluntarily provide employees up to 80 hours of EPSL in the period from April through September 2021, in addition to any EPSL provided earlier, and be eligible for the corresponding tax credit.

IMPORTANT CONSIDERATIONS:

• Employers must also be aware that if they provide the EPSL and/or paid family medical leave, it must be counted toward their standard bank of FMLA leave hours.
• Any previously paid EPSL/EFMLEA hours are disregarded as of April 1, 2021. The clock has been reset.