The American Rescue Plan Act (“ARPA”) was signed into law on March 11, 2021. Among its multitude of relief provisions are a couple which require urgent attention by plan sponsors and service providers of health and welfare plans:
Mandatory: COBRA Subsidies and Special Enrollment Period:
Federal subsidies to “Assistance Eligible Individuals” (“AEIs”) for COBRA coverage are available for the period April 1, 2021 to September 30, 2021 (the “subsidy period”).
AEIs must be given another opportunity (a “special enrollment period”) to elect COBRA beginning April 1, 2021 through 60 days following the date they receive notice of the special enrollment period.
AEIs may also be given the option to enroll in a less expensive option.
Election notices for qualifying events that occur during the subsidy period must include information regarding the availability of the subsidy and the ability to elect a less expensive option, if applicable.
Notices of the new subsidy and ability to enroll in a less expensive option, if applicable, must be provided to AEIs whose qualifying event occurred prior to April 1, 2021 (and who are still within their COBRA maximum coverage period), no later than May 30, 2021.
Model notices will have been issued by DOL.
Plan sponsors will need to take immediate action to:
Identify AEIs.
Decide whether to offer the ability to enroll in a less expensive option for AEIs already enrolled in COBRA.
Ensure that election notices regarding these subsidies and special enrollment periods are sent out by the applicable dates, either by their COBRA administrator or in-house.
IRS has indicated they are rushing to issue additional guidance shortly, including guidance on disabled AEIs.
Optional: Increase in Dependent Care Flexible Spending Account Limit:
For 2021 only, the maximum contribution to a dependent care flexible spending account may be increased from $5,000 to $10,500.
This is optional for plan sponsors, but if the plan sponsor wishes to adopt this change, the decision should be made and communicated to employees as soon as possible as the increase will have less utility to employees later in the plan year.
If this option is allowed, plan amendments will need to be adopted before the end of 2021.
For more details on these ARPA changes, please contact your Boutwell Fay attorney.