The American Rescue Plan Act of 2021 (ARP), signed into law by President Biden on March 11, 2021, provides premium subsidies for COBRA and state continuation coverage (often referred to as Mini-COBRA) to assistance eligible individuals from April 1, 2021 to September 30, 2021.
Mini-COBRA and COBRA Frequently Asked Questions
1. What is Mini-COBRA as compared to COBRA?
COBRA generally permits former employees and their qualified dependents to continue receiving coverage under an employer’s group health plan for a specified length of time (18-36 months) following a qualifying event that results in a loss of coverage. COBRA is a federal law that generally applies to employers with 20 or more employees.
Mini-COBRA applies to employers who are not subject to federal COBRA, such as group plans with less than 20 employees, church employer plans, and certain governmental plans. Like COBRA, Mini-COBRA also permits former employees and their qualified dependents to continue receiving coverage under an employer’s group health plan for a specified length of time (12 months) following a qualifying event that results in a loss of coverage.
State continuation coverage is often referred to as Mini-COBRA because it is similar to federal COBRA, but there are some differences with respect to timing and eligibility. Ohio’s state continuation law can be referenced here: Ohio Revised Code section 3923.38.
The department has also issued FAQs on Ohio’s continuation coverage requirements here:COBRA Information | Department of Insurance (ohio.gov).
2. What subsidies are available for Mini-COBRA?
The ARP provides federal subsidies that pay 100% of the cost of COBRA or coverage under a State program that provides “comparable continuation coverage.” Although “comparable continuation coverage” is not defined in the ARP, we anticipate that Ohio’s continuation coverage is likely eligible for the subsidy. We note that additional federal guidance on this topic may be forthcoming, though it is the Internal Revenue Service (IRS) that will make the final determination on subsidy eligibility.
3. Who is an “assistance eligible individual”?
Individuals (and their eligible dependents) who are eligible for Mini-COBRA because they lost employer coverage due to involuntary termination of employment (other than for gross misconduct) or a reduction in works hours and are enrolled in Mini-COBRA during the period of April 1, 2021 through September 30, 2021 are eligible for the premium subsidy.
4. How are the subsidies made available?
Assistance eligible individuals do not pay any part of the Mini-COBRA premium, including any administrative fee, for the period of coverage between April 1, 2021 and September 30, 2021. The premium is paid by the employer, plan administrator or insurer, and reimbursed through a COBRA premium assistance tax credit.
Under the ARP, the insurer providing the coverage under the group health plan is eligible for the tax credit for Mini-COBRA, while the employer or plan sponsor is eligible for the tax credit for federal COBRA or Mini-COBRA coverage under a MEWA.
The department is not able to provide guidance on how the premium should be paid or how the tax credits should be requested; further guidance from the IRS about the reimbursement credit process is anticipated.
5. What is the time frame for an assistance eligible individual to enroll in Mini-COBRA and receive the premium subsidy?
The ARP did not change state eligibility or election periods for Mini-COBRA. The time frame for enrollment in Mini-COBRA depends on the individual’s employment termination date and the receipt of notification from the individual’s employer. Again, the subsidies are available for a specific period of coverage: April 1, 2021 through September 30, 2021.
6. Are there notices that employers should provide to assistance eligible individuals related to the subsidy?
Yes, the ARP included specific notification requirements and the Department of Labor (DOL) has issued model notice templates that employers can modify to fit their particular circumstances.
The model notice for Mini-COBRA can be accessed here: Model Alternative Notice of ARP Continuation Coverage Election Notice (dol.gov)