DOL Issues Model COBRA Subsidy Notices and Initial Guidance on COBRA Subsidy Relief under the American Rescue Plan Act of 2021

As discussed in our prior blog post, the American Rescue Plan Act of 2021 (ARP) requires employers that sponsor group health plans to provide a 100% COBRA subsidy for “Assistance Eligible Individuals” during the “Subsidy Period” (April 1 through September 30, 2021, or the date the participant is no longer an Assistance Eligible Individual, if earlier) and to offer a COBRA special election opportunity for certain individuals to enroll in COBRA coverage in order to receive the benefit of the COBRA subsidy.

In connection with this COBRA relief, the ARP also requires employers who are subject to its COBRA relief provisions to distribute COBRA notices that explain the COBRA subsidy, COBRA special election opportunity, and other optional COBRA relief (if an employer chooses to implement the optional relief).  In addition, the ARP requires employers to notify Assistance Eligible Individuals who receive the COBRA subsidy in advance of the date that an individual’s subsidy will expire.

Model Notices and Summary Information

The Department of Labor (DOL) has issued model notices and summary information, which can be used to satisfy the ARP notice requirements:

Model General Notice and COBRA Continuation Coverage Election Notice

When is this model used?  This model is used in lieu of a group health plan’s standard COBRA election notice for qualified beneficiaries who have qualifying events occurring from April 1 through September 30, 2021.

What is the deadline to provide this notice?  This notice is subject to the same deadlines that otherwise apply for COBRA election notices (44 days after the COBRA qualifying event for an employer that is the plan administrator).

Model Notice in Connection with Extended Election Period

When is this model used?  This model is used for Assistance Eligible Individuals who became entitled to COBRA prior to April 1, 2021 and who are still within their maximum COBRA coverage period.  This group includes both Assistance Eligible Individuals who are currently enrolled in COBRA and individuals who would be Assistance Eligible Individuals if they had elected and/or maintained COBRA continuation coverage.

What is the deadline to provide this notice?  This notice must be distributed no later than May 31, 2021.  Note that an individual’s special election period continues for 60 days after the notice is provided, so distributing the notice sooner will close the special election period earlier.

Model Alternative Notice

When is this model used?  This model is used for insured coverage that is subject to state continuation requirements, in lieu of the standard continuation coverage election notices that would otherwise be provided from April 1 through September 30, 2021.

What is the deadline to provide this notice?  This notice is subject to the same deadlines that otherwise apply for state continuation coverage election notices.

Model Notice of Expiration of Premium Assistance

When is this model used?  This model is used to provide advance notification when an individual’s COBRA subsidy is about to expire.

What is the deadline to provide this notice?  This notice must be distributed between 45 and 15 days prior to the date on which an individual’s COBRA subsidy will end.  Note that a participant’s entitlement to the subsidy may end earlier than September 30, 2021, if the participant’s COBRA coverage period ends or if the participant becomes entitled to other group health plan coverage or Medicare.

Summary of COBRA Premium Assistance Provisions under ARP

When is this model used?  This model is required to be provided with each of the revised COBRA election notices.  The Summary includes the form that individuals can use to request treatment as an Assistance Eligible Individual.

What is the deadline to provide this notice?  The deadline for providing the summary aligns with the applicable deadline for providing the notice to which the summary is attached.

Deadlines

The extension of the COBRA deadlines described in the Joint Relief and EBSA Disaster Relief Notice 2021-21 (discussed here) does not apply to either the participant’s 60-day period to elect subsidized COBRA coverage or the employer’s deadline for providing the revised COBRA election notices.

Frequently Asked Questions

The DOL also published FAQs written primarily for group health plan participants that do not provide the detailed guidance plan sponsors need in order to resolve many open questions. For example, the FAQs note that an individual who is eligible for COBRA due to a voluntary reduction in hours could be an Assistance Eligible Individual, but the FAQs do not provide any further clarification of what qualifies as an “involuntary termination” for purposes of the ARP COBRA relief.

The FAQs do, however, confirm that the extension of the COBRA deadlines described in the Joint Relief and EBSA Disaster Relief Notice 2021-21 (discussed here) does not apply to either an individual’s 60-day period to elect subsidized COBRA coverage or an employer’s deadline for providing the revised COBRA election notices.  This confirmation is a welcome relief for plan sponsors and plan administrators; however, more guidance on other open questions would be helpful and appreciated.

Please refer to our prior blog post for additional issues employers should consider when implementing the ARP COBRA subsidies and contact your Faegre Drinker benefits attorney with questions or for assistance with this and other COBRA relief.