As part of the American Rescue Plan Act (ARPA) of 2021, plan sponsors of group health plans will be required to offer a COBRA premium subsidy for coverage between April 1 and September 30, 2021. For full details on the COBRA premiums subsidy, see the prior Leavitt Group article.
Assistance Eligible Individuals (AEI) are eligible for the COBRA subsidy in the amount of 100% of the premium, paid by the employer-plan sponsor, in most instances (aside from state COBRA continuation coverage). The subsidy is available for the COBRA qualifying events of reduction in hours or involuntary termination, for any reason, not just COVID-19 related, if occurring within the last 18 months – whether the AEI elected, failed to elect, or elected and since dropped-off COBRA.
Along with the COBRA premiums subsidy requiremen is the corresponding notice of available subsidy and option to elect different coverage of the same or lower premium of the coverage they had at the time of the qualifying event. The Department of Labor (DOL) had 45 days from the date of enactment of ARPA to issue model COBRA notices intended for this purpose. The model DOL notices can be found here.
Frequently Asked Questions (FAQ) are reflected on the DOL page with the model notices. These are general FAQs, unrelated to the premium subsidy, but may offer additional helpful guidance on the general COBRA rules.
Conclusion
Employers with employees eligible for the COBRA premium subsidy must provide the notice of availability within 60 days, or by June 1st. It is advisable to do so as soon as possible, however. Employers are reminded that a Notice of Expiration of the COBRA Subsidy is also required to be provided 45 days prior to expiration. Employers may lean on their COBRA Administrator for assistance with compliance with these new notice requirements. Where administering COBRA in-house, be sure to set up a tracking system to track the timing of any AEI entitled to Notice of Subsidy Availability within 60 days and Notice of Expiration 45 days prior. An external review process will be available to employees suffering a reduction in hours and involuntary termination, with the exception of gross misconduct (not poor performance). While this review process is not yet up and running by the DOL, it will offer broad leniency to the AEI. Therefore, it is advisable, employer-plan sponsors do the same.