The Department of Labor released a long-awaited host of resources Wednesday on the changes to COBRA made by the American Rescue Plan Act (ARPA). The guidance includes FAQs, five Model Notices and election forms, and a new page dedicated to COBRA premium subsidy guidance on the DOL website. 

From April 1 to September 30, the federal government is subsidizing COBRA premiums at 100 percent. All qualified beneficiaries must be provided with a COBRA-election notice with information about these new subsidies. The Model General Notice and COBRA Continuation Coverage Election Notice provide guidance regarding any qualified beneficiary who loses coverage due to a reduction in hours or involuntary termination at some point between April 1 and September 30 of this year. This notice can act as a supplement to the standard COBRA-election notice or its terms may be integrated with the original COBRA-election notice. One vital provision included in this guidance that separates this COBRA election from normal COBRA rules is the timeline in which beneficiaries elect COBRA: within 60 days of receipt of the election form, not the date of the notice. Receipt of notice is not something that plan administrators normally track, so it is crucial to keep this change in mind.

One of the most frequently asked questions NAHU has received about these COBRA subsidies is in regards to state continuation. Since some states impose their own COBRA coverage requirements, which can extend beyond the time limits for federal COBRA, DOL guidance describing how these federal changes impact state programs is crucial. The Model Alternative Notice provides guidance for questions in this area, stating that “the premium assistance is also available for continuation coverage under certain state laws," and does indeed apply to "state continuation coverage laws." ARPA COBRA provisions "only allow assistance-eligible individuals who elect continuation coverage under state insurance law to receive premium assistance from April 1, 2021, through September 30, 2021,” meaning that ARPA does not change any state requirements. The subsidy also applies to small-employer plans subject to state continuation requirements.

ARPA also requires plan administrators to provide a special extended election period for those who became eligible for COBRA prior to April 1. For this, the DOL released the Model Notice in Connection with Extended Election Period, which should be sent to eligible individuals who are still in their 18-month COBRA window as of April. It is important to note that guidance specifies that this notice is due to eligible beneficiaries before May 31, regardless of whether the individual is enrolled in COBRA or previously declined COBRA.

In regard to questions surrounding the eligibility period, the DOL released the Model Notice of Expiration of Premium Assistance and Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021. The model notice is to be sent to individuals 45 days before their subsidy will expire. While ARPA clearly states that the subsidy period lasts from April 1 to September 30, there are scenarios outlined in this guidance where the subsidy period could end earlier. If an individual is or becomes eligible for Medicare, is eligible for another group health plan (regardless of whether they are covered by that plan), or is at the end of their maximum COBRA coverage period, the individual’s eligibility for the COBRA subsidy will end. If individuals fail to provide notice that they fall into one of these categories, they could receive a $250 penalty, and that penalty increases if the failure to notify is clearly fraudulent.

NAHU will be hosting a Compliance Corner webinar reviewing all of this information in greater detail on Thursday, April 29, at 1:00 p.m. ET. Register here.