On April 7, 2021, the Department of Labor (DOL) released a new webpage dedicated to the COBRA subsidies available through the American Rescue Plan Act (ARPA).
ARPA provides a 100 percent subsidy for COBRA coverage for individuals whose coverage was terminated due to a reduction in hours or an involuntary termination of employment. The subsidy applies from April 1 through September 30, 2021.
The webpage includes a link to FAQs as well as multiple new model notices. However, several questions on employers’ minds are still unanswered.
Frequently Asked Questions
The webpage is organized into two sections – one for Workers and Families and another for Employers and Advisers. While the same FAQ document is linked within each section, it is generally written toward individuals seeking coverage and addresses topics such as:
- Elections and
- Interaction with individual health insurance coverage
The FAQs confirm that the Outbreak Period relief for certain plan and participant deadlines does not apply to the notice or election periods related to the COBRA subsidies. However, an individual may elect COBRA to begin prior to April 1 from an earlier qualifying event, if the individual is eligible to make that election, including under the time frames extended by the Outbreak Period.
The DOL released the following new model notices:
- Model General Notice and COBRA Continuation Coverage Election Notice – This notice is for use by group health plans for qualified beneficiaries who have any qualifying event occurring from April 1, 2021 through September 30, 2021.
- Model Notice in Connection with Extended Election Period – This is for use by group health plans for qualified beneficiaries currently enrolled in COBRA continuation coverage, due to a reduction in hours or involuntary termination (Assistance Eligible Individuals), as well as those who would currently be Assistance Eligible Individuals if they had elected and/or maintained COBRA continuation coverage.
- Model Alternative Notice – This notice is for use by insured coverage subject to state continuation requirements between April 1, 2021 and September 30, 2021.
- Model Notice of Expiration of Premium Assistance – This notice is for use by group health plans to Assistance Eligible Individuals 15-45 days before their premium assistance expires.
Additional Guidance Needed
There are still open issues that will need to be addressed, such as the definition of an “involuntary termination” and details on how employers will claim the corresponding payroll tax credit. We anticipate further guidance – potentially in the form of an employer-directed FAQ document – will be issued shortly that will address these and other questions on employers’ minds.
The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.