On April 7, 2021, the U.S. Department of Labor (DOL) issued FAQs and model notices for the COBRA premium assistance provisions of the American Rescue Plan Act (ARPA). The ARPA provides a 100% subsidy for employer-sponsored group health insurance continued under COBRA and similar state continuation of coverage programs for eligible individuals. The subsidy applies from April 1 through Sept. 30, 2021. The notices and the FAQs appear on a new DOL webpage dedicated to the ARPA COBRA subsidy.
The new model notices are the following:
- Model General Notice and COBRA Continuation Coverage Election Notice: This notice will be used when a qualified beneficiary who involuntary terminates employment or has a reduction in hours (which can be voluntary or involuntary) with COBRA starting any time between April 1 – September 30, 2021. This notice is applicable for those plan sponsors (employers) who are subject to FEDERAL COBRA. MS Word | PDF
- Model Notice in Connection with Extended Election Period: This notice will be used for those Assistance Eligible Individuals (AEI) who are required to have a “second election period.” To qualify the AEI will be currently enrolled in COBRA, previously declined COBRA or enrolled in and dropped COBRA (including not paying COBRA premiums). This notice must be sent to AEIs by May 31, 2021. MS Word | PDF
- Model Notice of Expiration of Premium Assistance: This notice will be used to notify individuals that their subsidy will be ending. It must be sent between August 16 – September 15, 2021. This will not be required to send to individuals losing the subsidy due to becoming eligible for other employer sponsored health plan coverage or Medicare. MS Word | PDF
- Model Alternative Notice: This notice will be used for plans subject to state continuation coverage. MS Word | PDF
The DOL guidance contains 21 FAQs on topics such as eligibility, application procedure, notice requirements and duration of the subsidy. Notably, the FAQs state that prior federal COVID-19-related relief for plan deadlines does not apply to notices or election periods set forth in the ARPA provisions about the COBRA subsidy. However, an individual may elect COBRA from an earlier qualifying event if the individual is eligible to make that election, including under the extended time frames provided under that relief. You may read these FAQs at the DOL’s webpage.
If you manage COBRA in-house, it is suggested to compile a list of those who involuntarily lost employment or had a reduction in hours (voluntary or involuntary) during the look back period (back to November 2019). Review and customize the applicable COBRA model notice to the individual’s specifics and provide before May 31, 2021.
If you use a COBRA Administrator, reach out to them or your Capital Group Account Management team on the specifics of their process. It is suggested to see what the Administrator will be assisting you with and what service they will not be providing.
The DOL has answered some questions in their FAQs and provided the Model Notices, however, we are still waiting for further guidance from the Department of Treasury. Stay tuned for more information as it becomes available.