The Department of Labor (DOL) posted Model COBRA Notices and an accompanying FAQs to “fill in the gaps” on guidance for group health plans and plan administrators regarding the American Rescue Plan Act’s (ARPA’s) 100% COBRA Premium Subsidy (Subsidy) for assistance eligible individuals (AEIs) from April 1, 2021 through September 30, 2021. AEIs are those involuntarily terminated from employment or who experienced a reduction in hours and have elected COBRA. Additionally, there is an extended election period, outlined in detail in Question 5 of the FAQ.
To refresh your knowledge on basics of ARPA’s COBRA Subsidy, read on and review our March 19, 2021 blogpost.
What do I Need to Know?
COBRA administrators have been anxiously awaiting further guidance from the DOL regarding implementation specifics, not to mention Model Notices, for the various iterations of how the Subsidy will apply. Consider:
- Subsidy assistance runs from April 1, 2021 through September 30, 2021. The Subsidy applies to comparable state COBRA coverage.
- Employees will pay no portion of this Subsidy. Payment of premiums will be to the employer in the form of tax credits, including the 2% administrative fee.
- The Subsidy applies to all plans typically subject to ERISA and PHSA, and those with state COBRA laws
- A Model Notice must be provided by May 30, 2021 to AEIs
- There are multiple Model Notices:
- A general notice to all qualified beneficiaries
- A notice of extended COBRA election period to any AEI (or anyone who would have been an AEI) who had a qualifying event before April 1, 2021. This notification must be completed by May 31, 2021, with 60 days to elect coverage. AEIs may choose to begin coverage from election date or retroactively from April 1, 2021.
- An alternative notice that insured plans subject to state continuation requirements must provide
- Notice of expiration of periods of premium assistance to be provided 15-45 days before an AEI’s Subsidy expires
- Summary of the Subsidy provisions, to be attached to the general notice with a form for the AEI to complete re: alternative coverage
- Individuals eligible for Medicare or other group health coverage are NOT eligible for the Subsidy.
- Employees terminated for gross misconduct are ineligible for both COBRA and the Subsidy
- Eligibility for, or enrollment in, Medicaid or Exchange coverage is not a disqualifier.
- COVID-19 outbreak period extensions (Notice 2021-01) do not apply to the notice or election deadlines related to the Subsidy.
- Failure to provide applicable notices subjects the Plan to excise taxes
I’m a Plan or Plan Administrator: What do I do Now?
- Read the DOL’s FAQ document on the Subsidy under ARPA.
- Familiar yourself with the various COBRA Subsidy Model Notices
- Edit the model notices as applicable before sending to various AEI’s.
- Consider a “refresher course” for all employees and distribute the DOL’s General FAQ on COBRA
- Work with counsel to verify any state COBRA laws, as applicable.
- Work collaboratively with Plans to verify who is eligible for the COBRA subsidy and coordinate distribution of notices.