Clarification Provided on Mini-COBRA and the American Rescue Plan Act

Following the passage of the American Rescue Plan Act (ARPA) in March 2021, questions arose from ambiguity in the statute as to whether the provisions of the Act relating to COBRA applied to state continuation of coverage programs, including those provisions allowing for enrollment in COBRA, even if a person previously declined coverage or if that person’s enrollment window had closed. Although it was believed that the COBRA provisions of the ARPA would be applicable to state continuation of coverage programs, recent clarification by the IRS reveals it is not so simple — not all of the ARPA’s provisions will apply to state programs.

In May 2021, the IRS issued a notice providing guidance [https://www.irs.gov/pub/irs-drop/n-21-31.pdf] that details how the ARPA’s COBRA provisions impact state mini-COBRA plans. One area in which the information in the notice diverged from what had been anticipated is the clarification that unless the state provides its own extended enrollment, an individual who previously declined to participate in a state mini-COBRA program does not have an extended election opportunity.

Businesses should consult with their health insurance providers and tax specialists for further details. Navigating the interplay between the ARPA and mini-COBRA programs will be difficult.