September 30, 2021 Marks the End of the COBRA Premium Subsidy ‎–‎ Don’t Overlook the Expiration Notice

Locke Lord LLP

As discussed in our prior posts here, here and here, the American Rescue Plan Act of 2021 provides a 100% COBRA premium subsidy for continuation coverage between April 1 and September 30, 2021 for certain assistance eligible individuals (AEIs).  With the COBRA subsidy period set to expire on September 30, 2021, plan administrators are required to notify AEIs of the subsidy’s expiration.

Plans are required to send a notice at least 15 days (but no more than 45 days) before an AEI’s premium subsidy is set to end.  The COBRA premium subsidy ends on the earlier of (i) September 30, 2021, (ii) the date the AEI reaches the end of their maximum COBRA continuation period or (iii) the date the AEI becomes eligible for Medicare or another group health plan.[1]  In most cases, this means the expiration notice must be provided by September 15, 2021.

Note that if an AEI’s COBRA premium subsidy ends because they have become eligible for health coverage through Medicare or another group health plan, an expiration notice is not required.

The expiration notice must explain the following, in “clean and understandable language:”

  • when the subsidy ends;
  • how much time, if any, remains in the AEI’s COBRA coverage period; and
  • the amount of the non-subsidized COBRA premium.

The U.S. Department of Labor has provided a Model Notice of Expiration of Premium Assistance that can be used for this purpose.

[1]  AEIs must notify the plan administrator of becoming eligible for Medicare or another ‎group health plan.  Failure to do so can result in a tax penalty.

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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