Seyfarth Synopsis: As discussed in our March 11, 2021 Alert, Congress has made another avenue of health coverage more accessible by fully subsidizing the cost of COBRA coverage from April 1 - September 30, 2021 for individuals who lost their health coverage due to an involuntarily termination or a reduction in hours under the American Rescue Plan Act of 2021 (ARPA). On April 7, 2021, the Department of Labor (DOL) published FAQs to further explain this COBRA subsidy and provided models of the required related notices.
Notable Points from the FAQs
New Model Notices
ARPA requires employers to notify qualified beneficiaries regarding the availability of this COBRA subsidy and their related rights. The DOL provided the following model notices as described more fully below:
- Notice: General Notice.
Deadline: 60 days after the qualifying event (normal COBRA procedure).
Description: This notice is for plans subject to Federal COBRA to send to individuals experiencing any qualifying event between April 1, 2021-September 30, 2021 (including voluntary terminations). It is essentially the DOL’s standard COBRA general notice with ARPA information woven throughout. So, while this notice may be provided separately or with the standard COBRA general notice, it makes sense to use the ARPA general notice during the relevant period rather than providing participants two sets of notices.
- Notice: Alternative Notice
Deadline: Normal state mandated deadlines.
Description: This notice is an option for plans subject to state mini-COBRA laws (not Federal COBRA). They may send to individuals experiencing any qualifying event between April 1, 2021-September 30, 2021 (including voluntary terminations).
- Notice: Notice of Extended Election Period.
Deadline: May 31, 2021.
Description: This is the notice directed at people who had COBRA qualifying events in the past. It is for individuals who lost Federal COBRA coverage due to involuntary termination of employment or reduction in hours occurring generally between October 1, 2019 and March 31, 2021.* So by May 31, 2021, employers must notify such individuals that they have a special 60-day opportunity to elect COBRA prospectively between April 1, 2021 through September 30, 2021. The COBRA coverage period cannot exceed the coverage period they otherwise would have been entitled to in connection with the original qualifying event.
- Notice: Request for Treatment as an Assistance Eligible Individual
Deadline: Same as deadline for the notice listed above.
Description: This should be attached to the three notices listed above. It is the form for individuals to complete to request premium assistance.
- Notice: Notice of Expiration of Subsidy Period.
Deadline: 15-45 days before subsidy ends.
Description: ARPA also requires notice when premium assistance is expiring, with the notice to be sent no more than 45 days from expiration, and no less than 15 days from expiration. It must be sent to anyone whose subsidized Federal or State mini-COBRA ends between April 1, 2021 and September 30, 2021, and is still entitled to more COBRA coverage after the subsidy ends.
The FAQs provide that employers may be subject to an excise tax of $100 per qualified beneficiary per day, not to exceed $200 per family per day, for failure to timely provided the above notices.
Please contact your Seyfarth Benefits Attorney with any questions.
*This is general guidance only. The specific dates may vary from plan to plan.