On April 7, the Department of Labor (DOL) issued model notices and FAQs as a follow up to Congress’s recent passage of COBRA subsidies for certain individuals. The guidance is available here.
As a reminder, under the American Rescue Plan Act of 2021 (“ARPA”), individuals who lose health care coverage due to their or their family member’s involuntary termination (for reasons other than the employee’s gross misconduct) or reduction of hours are eligible for a tax-free subsidy of 100% of the COBRA cost for up to six months from the period April 1, 2021, through September 30, 2021.
Employers must provide a notice describing the subsidy to the following individuals:
The DOL clarified that the COVID-19-related extended deadline relief for COBRA elections and notices do not apply to the COBRA subsidy’s 60-day notice and election periods. In other words, qualified beneficiaries under both scenarios above have only 60 days after the notice is provided to elect COBRA with the subsidy. These individuals have a longer period to elect unsubsidized COBRA coverage.
The DOL’s model notices for both of these scenarios are available here. The DOL also published a model notice applicable to state mini-COBRA continuation coverage under insured plans, as well as a notice to inform qualified beneficiaries of the end of the subsidy period.
When sending out the subsidy notices, employers should also include enrollment forms, including forms individuals can complete to indicate that they are eligible for the subsidy and not eligible for another group health plan or Medicare. The DOL also published a summary of the ARPA provisions related to the COBRA subsidy. It informs individuals of the penalties they may incur if they fail to notify the plan administrator of their eligibility for another employer-sponsored group health coverage or Medicare.
Over the next few months, employers may receive a form entitled “Request for Treatment as an Assistance Eligible Individual.” The DOL published this form for the use by individuals who believe they are eligible for the subsidy, but who don’t receive a notice. Therefore, an employer who receives this completed form should assess whether the individual is eligible for the COBRA subsidy. If so, the employer should stop collecting COBRA premiums from the individual for the subsidy period (or until the end of the individual’s COBRA continuation period, if earlier) and refund any premiums already paid for any period from April 1, 2021.
The DOL also clarified the following:
The DOL guidance did not address a number of open questions, including, for example, whether employers who voluntarily provide COBRA subsidies under a severance agreement can recoup their cost of coverage.
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