DOL Issues Model Notices for COBRA Premium Assistance

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As we discussed in a previous article, the American Rescue Plan Act of 2021 (ARP), provided premium assistance and an extended election period under COBRA and similar state laws for “assistance eligible individuals” (AEIs). Employers were required to provide certain notices to individuals regarding the premium assistance and extended election period, and the Department of Labor (DOL) was directed to issue model notices for such purposes. The DOL has now issued the model notices and has provided some further guidance on these provisions of the ARP. Employers must now expeditiously review these model notices, adapt them as necessary, and establish administrative processes for completing and furnishing the notices.

The DOL has posted the following model notices and related documents on its website:

Notice in Connection with Extended Election Period

  • What is it? This model notice satisfies the requirement under the ARP that AEIs and individuals who would be AEIs if they had elected and/or maintained COBRA coverage be notified of the extended COBRA election period and their potential eligibility for premium assistance. For individuals who are already enrolled in COBRA coverage, the notice informs them that they may be an AEI and should complete and submit the “Request for Treatment as an Assistance Eligible Individual” included in the “Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021,” which should be provided with the notice. The notice includes an election form for such individuals not already on COBRA coverage and a form for switching COBRA coverage benefit options, if permitted by the employer.
  • Who should receive it? Individuals who became AEIs prior to April 1, 2021, and individuals who would be AEIs if they had elected and/or maintained COBRA coverage prior to April 1, 2021, should receive it.
  • When should it be sent? It should be sent by May 31, 2021.

ARP General Notice and COBRA Continuation Coverage Election Notice

  • What is it? This model notice serves as the general COBRA election notice and also satisfies notice requirements under the ARP. Significantly, the notice includes boxes for the employer to check to state the reason for the loss of coverage, which will signify the qualified beneficiary’s status as an AEI eligible for the subsidy. The DOL states that employers using the model notice should also include the “Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021,” described below, which the DOL has also posted on its website.
  • Who should receive it? COBRA qualified beneficiaries who experience any qualifying event under COBRA from April 1, 2021, through September 30, 2021, should receive it.
  • When should it be sent? It should be sent within 14 days after the employer receives notice of the qualifying event (subject to a COVID-19 extension).

Notice of Expiration of Period of Premium Assistance

  • What is it? This model notice satisfies the requirement under the ARP that AEIs be notified that their period of premium assistance will expire soon. The notice includes check boxes for the employer to indicate whether continuation coverage is ending or just the premium assistance is ending.
  • Who should receive it? AEIs who have been receiving premium assistance should receive it.
  • When should it be sent? It should be sent no more than 45 days and no less than 15 days before the individual’s premium assistance expires. The notice does not have to be provided if the individual’s premium assistance ceases due to the individual gaining other coverage.

Alternative Notice of ARP Continuation Coverage Election Notice

  • What is it? This model notice satisfies the requirement under the ARP that AEIs and individuals who would be AEIs if they had elected and/or maintained continuation coverage under an applicable state mini-COBRA law be notified of any extended state continuation coverage election period and their potential eligibility for premium assistance. For individuals who already have state continuation coverage, the notice informs them that they may be an AEI and should complete and submit the “Request for Treatment as an Assistance Eligible Individual” included in the “Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021,” which should be provided with the notice. The notice includes an election form for such individuals not already on state continuation coverage and a form for switching state continuation coverage benefit options, if permitted by the employer.
  • Who should receive it? AEIs enrolled in state continuation coverage, individuals who would be AEIs if they had elected and/or maintained state continuation coverage, and individuals who experience a qualifying event under an applicable state mini-COBRA law from April 1, 2021, through September 30, 2021, should receive it.
  • When should it be sent? The notice should be provided by May 31, 2021, for individuals who became AEIs prior to April 1, 2021, and individuals who would be AEIs if they had elected and/or maintained continuation coverage under an applicable state mini-COBRA law prior to April 1, 2021. It is unclear when the notice should be provided to those who become AEIs from April 1, 2021, through September 30, 2021. Presumably, the notice should be provided in conjunction with an election notice required under the applicable state law.

Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021

  • What is it? The summary provides (i) information to individuals of the eligibility requirements for premium assistance, (ii) a form for individuals to complete and submit to the employer to request treatment as an AEI, and (iii) a form for individuals to complete and provide to the employer to notify the employer that the individual has gained other coverage and is no longer eligible for premium assistance. The form to request treatment as an AEI includes a section for the employer to complete to approve or deny the request. If the request is denied, a reason for the denial must be provided.
  • Who should receive it and when? The summary and its forms should be provided with each of the model notices described above, other than the Notice of Expiration of Period of Premium Assistance.

In addition to the above notices and summary, the DOL posted a document on its website titled “FAQs about COBRA Premium Assistance Under the American Rescue Plan Act of 2021.” The FAQs are directed toward individuals and provide a high-level summary of the COBRA premium assistance provisions under the ARP. We expect that the Internal Revenue Service will soon issue substantive guidance to answer the many open questions facing employers, such as what constitutes a “voluntary termination” for defining an AEI.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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