Compliance ✔- ARPA COBRA Subsidy – Model Notices and FAQs

The Department of Labor (DOL) issued FAQs and model notices for the COBRA premium assistance provisions of the American Rescue Plan Act (ARPA). As a reminder, ARPA provides a 100% subsidy for employer-sponsored group health insurance continued under COBRA and similar state continuation of coverage programs for eligible individuals, who lose (or lost) health coverage due to a reduction in hours or involuntary termination of employment. The subsidy applies from 4/1 – 9/30/21. The government will advance (or reimburse) employers for the COBRA subsidy expense via payroll tax credits. More to follow on the tax credit process from the IRS.

In the meantime, employers should take the following action immediately and coordinate with their COBRA administrator, if outsourced:

1. Review the information on the DOL’s ARPA COBRA subsidy webpage to understand the requirements and processes for employers and their COBRA qualified beneficiaries.
2. Start using the new (temporary) COBRA Election Notice (link below) for qualifying events occurring on or after 4/1/21.
3. Identify other individuals who may be eligible for the subsidy and send them the Extended Election Notice (link below) by 5/31/21. See the attached bulletin below (“Extended Election Period” at the bottom of page 2) for details on which COBRA Qualified Beneficiaries (including dependents) to send this notice. Generally, applicable to individuals with a reduction in hours or involuntary termination (qualifying events) on or after 10/1/19.

Employers must start sending the applicable notice(s) now, or coordinate with their COBRA administrator, if outsourced. Existing rules for the manner and timing of COBRA notices apply, unless otherwise specified by ARPA.

See links below to the new model notices released by the DOL:

Model General Notice and COBRA Continuation Coverage Election Notice: Start sending now for qualifying events occurring 4/1/21 – 9/30/21.(Note: This notice replaces the traditional COBRA Election Notice until the end of the subsidy period.)

Model Notice in Connection with Extended Election Period: Send by 5/31/21 to all qualified beneficiaries with a qualifying event of a reduction in hours or involuntary termination, who as of 4/1/21:

• are enrolled in COBRA; or
• would be in their COBRA duration period if they had elected and/or maintained COBRA coverage. Generally, this applies to individuals with a reduction in hours or involuntary termination (qualifying events) on or after 10/1/19.

Model Alternative Notice: Applies only to insured coverage subject to state continuation requirements, e.g., mini-COBRA.

Model Notice of Expiration of Premium Assistance: Send 15-45 days before an individual’s premium assistance/subsidy ends.

Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021: Attach to the “Model General Notice and COBRA Continuation Coverage Election Notice” and “Model Notice in Connection with Extended Election Period.” This includes forms that must be completed by individuals applying for the subsidy and/or notifying employers they are no longer eligible for the subsidy.

See attached bulletin for information about the COBRA subsidy provisions included in the American Rescue Plan Act, 2021.

If you have questions or need help, please contact one of our benefit consultants.