On March 11, 2021, the American Rescue Plan Act (ARP) was signed into law. Part of this bill provides for temporary 100% COBRA premium subsidies for eligible former employees who suffered an involuntary job loss, and for current or former employees who have suffered a reduction in hours that made them COBRA-eligible. In some circumstances, a member might qualify both to use their sick leave in retirement and for the COBRA subsidy. 

Normally a member who has taken an immediate retirement annuity would not be eligible for COBRA and would start using their sick leave credits right away. However, if they are also eligible for the COBRA subsidy, they can enroll in COBRA coverage and escrow their sick leave credits while using the subsidy.

To qualify, the member must meet the following requirements: 

  • Eligible for COBRA ARPA as determined by their employer
  • Choose to retire
  • Eligible to use their sick leave credits

To enroll in COBRA coverage and use the subsidy, the member should submit the following to ETF: 

ETF will automatically approve the Sick Leave Credit Escrow Application (ET-4305). The member’s sick leave account will be put on hold and the member will be enrolled in a COBRA contract. Like other COBRA ARPA contracts, the member will need to work with their former employer to have their COBRA premiums paid. 

When the ARPA subsidy ends, the member can switch over to a sick leave contract as a retiree, but will need to submit a Sick Leave Credit Re-enrollment Application (ET-4317) along with a Group Health Insurance Application (ET-2331). We will automatically approve the sick leave re-enrollment and don’t need a loss of coverage letter. The member can also choose not to re-enroll when the subsidy runs out and can re-enroll at open enrollment. However, the end of their COBRA contract does not give them a chance to re-enroll unless it occurs at the same time the subsidy ends. 

If the member gains Medicare at the same time they would start COBRA, they are not eligible for COBRA or the subsidy. They will also lose eligibility for COBRA and the subsidy if they gain Medicare while on COBRA. The loss of the subsidy would allow them to re-enroll and use their sick leave credits instead. The member should submit the following to ETF to re-enroll using their sick leave credits:

See the employer news about the American Rescue Plan Act of 2021 for more information about ARP subsidy.