American Rescue Plan offers free COBRA coverage . . . but it's very complicated

When President Joe Biden signed the American Rescue Plan Act of 2021 (ARPA), one of the effects was to make COBRA continuation coverage free for certain qualifying individuals and their families from April 1 to September 30, 2021. The free coverage is available to those who lose group health plan coverage because either (1) they were terminated (not including resignations) or (2) their hours were reduced. So all you have to do is remember the two reasons and the new coverage until September 30, right? No, it's not that easy.

Complicating factor

The free coverage is also available to "expired COBRA participants,"i.e., those who (1) already lost coverage because of one of the two reasons and (2) could have had COBRA coverage during the period from April 1 to September 30, 2021. They would include people who either:

• Failed to elect COBRA coverage during their normal 60-day (but now-expired) election period; or
• Elected COBRA coverage but discontinued it before April 1, 2021.

Expired COBRA participants would likely include individuals going all the way back to November 2019.

New election period and notice requirement

Expired COBRA participants have a new 60-day election period beginning April 1, 2021, to choose COBRA coverage. The new period, however, doesn't extend their normal COBRA period. For example, if they were entitled to 18 months of COBRA because of a termination that occurred in November 2019, their coverage would still expire in April 2021.