The Department of Labor (DOL) released model notices to coincide with the COBRA subsidy available through September 30, 2021, under the American Rescue Plan Act (ARPA). This applies to both small employers extending state continuation of coverage as well as employers with at least 20 employees offering traditional COBRA benefits. As a reminder, the COBRA subsidy is not optional and tax credits will be available to employers for the amount of the premium assistance.
All employers offering group health insurance are required to notify any Assistance Eligible Individuals (AEI) of the COBRA subsidy. An AEI is someone eligible for COBRA coverage due to one of the following situations:
- There was a reduction in hours and the employee no longer qualifies for benefits under your group’s health plan and is within the COBRA coverage period any time between April 1, 2021, and September 30, 2021.
- The employee experienced an involuntary job loss and is within the COBRA coverage period any time between April 1, 2021, and September 30, 2021. This also includes a loss of coverage due to a qualifying life event, such as death, divorce, or aging off a plan. It does not include anyone terminated for gross misconduct.
It is not necessary to send notifications to individuals who do not fall into either of the situations listed above.
AEIs must be notified they are eligible for the COBRA subsidy no later than May 31, 2021, and must also be notified when the eligibility period will end. It is advised that all notifications include the Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021 to assist in explaining the reason the applicable notice is being sent.
The DOL has published model notices for employers to use for any of the qualifying reasons.
- Individuals first becoming eligible for COBRA benefits between April 1, 2021, and September 30, 2021, should be sent the Model ARP General Notice and COBRA Continuation Coverage Election Notice along with regular COBRA notifications. Both notifications should be sent so it is clear that the subsidy is only available for a portion of their eligibility period.
- Individuals currently enrolled in COBRA coverage, or those who are within the COBRA coverage period but may have previously waived or dropped coverage, that will continue to be eligible between April 1, 2021, and September 30, 2021, should be sent the Model Notice in Connection with Extended Election Period.
- Small employers (less than 20 employees) not required to offer COBRA, with AEIs between April 1, 2021, and September 30, 2021, but may have enrolled in state continuation coverage (not Medicare), should be sent the Model Alternative Notice.
Employers should send notification that COBRA subsidized benefits will expire at least 45 days, but no less than 15 days, prior to the last day of coverage using the Model Notice of Expiration of Premium Assistance.
More information on What Employers Need to Know About the COBRA Subsidy can be found on the MRA website. The DOL has also published FAQs for employers. MRA Hotline Advisors are available to answer your questions at firstname.lastname@example.org or 866.474.6854.