April 14, 2021
The American Rescue Plan Act of 2021 (ARPA) provided for a 6-month, 100% COBRA premium subsidy running from April 1 through September 30, 2021 (discussed in our recent webinar). On April 7, 2021, the Departments of Labor, Health and Human Services, and Treasury issued FAQs with some initial COBRA subsidy implementation guidance. We summarize below the provisions most relevant to employers and their group health plans.
COBRA Subsidy Guidance
Highlights from the FAQs include the following:
- Dental and vision. The subsidy is available for all employer-sponsored group health plans, including dental and vision coverage.
- Reduction in hours. The subsidy is available to participants who lose coverage due to any reduction in hours, not just involuntary reductions.
- Eligibility. In addition to employers’ obligation to identify subsidy-eligible individuals, COBRA qualified beneficiaries can request that their employers treat them as subsidy eligible (using this form). At this point, what employers should do if they disagree with a request remains unclear.
- Special enrollment. The FAQs suggest that once the COBRA subsidy ends, individuals who remain COBRA-eligible will become eligible to enroll in Exchange coverage, possibly with premium tax credits to subsidize that coverage. We expect that the Departments will clarify this process in later guidance.
We expect that the Departments will issue more implementation guidance in the coming weeks and will update our members when that guidance becomes available. In the meantime, we recommend that employers discuss with TPAs, health plans, and other vendors how to implement COBRA subsidy notices, enrollment, and other procedures.
The Departments also provided the following model notices, which are required by ARPA:
- Notice of COBRA subsidy. For distribution to subsidy-eligible individuals by 5/31/2021.
- General COBRA election notice with subsidy information. For distribution to participants who become COBRA-eligible during the 4/1/2021 – 6/30/2021 period (generally within 44 days of the COBRA qualifying event).
- Notice of expiration of COBRA subsidy. For distribution to individuals receiving the COBRA subsidy 15 – 45 days before the subsidy ends.
While employers can customize these notices to their particular plans, we recommend incorporating all of the information in these model notices to ensure compliance with ARPA.
A more detailed discussion of this guidance is available in our April 13, 2021 webinar, which is available here.
If you have questions, comments, or concerns about these or other regulatory and compliance issues, please contact us.