Do individuals covered only under state healthcare continuation qualify for the ARPA premium assistance or a special election period?

The American Rescue Plan Act (ARPA) provides a 100% premium subsidy for COBRA premiums, including state continuation premiums, under certain circumstances. However, absent further guidance, individuals covered only by state healthcare continuation programs do not appear to have a special election period.

Under the ARPA, individuals are eligible for premium assistance if they were terminated from employment (except when terminated due to gross misconduct) or experienced a reduction in hours (either voluntary or involuntary). Voluntary terminations (e.g., resignations) do not qualify an individual for premium assistance.

The ARPA provides a special election period for qualified beneficiaries who are eligible for premium assistance, and who are currently in their maximum continuation coverage period but either failed to initially elect continuation coverage or dropped continuation coverage. However, recent DOL guidance explains that the ARPA does not change any requirements or time periods for election of state continuation.

We believe that this means that there is not a special enrollment opportunity where state continuation applies, so it is not necessary to look back to determine who would qualify for state health continuation right now but have not elected it. Since ARPA does not give state continuation individuals a special enrollment opportunity, employers just need to run a report on who was enrolled in state continuation on April 1, 2021, to determine the group that gets the ARPA subsidy for state continuation. You can find the DOL guidance here.

The DOL provides a model Alternative Notice for all qualified beneficiaries subject to state health continuation, not just covered employees. It is clear that this notice is intended for those who experience a qualifying event sometime between April 1 and September 30. We believe that this form would also be used for persons who are covered by state health continuation before April 1 and continue to be covered during the subsidy period. However, it does not appear to give persons who initially declined state health continuation coverage or who dropped it before the end of the coverage period an opportunity to elect that coverage (as discussed above).

The client may wish to consult with counsel or with the insurance carrier before sending anything to a person who initially declined state health continuation coverage or who dropped it before the end of the coverage period.