As we informed you in our post last month, the American Rescue Plan Act of 2021 (ARPA) which was passed by Congress in early March included a 100% COBRA subsidy for individuals who experience(d) a loss of coverage due to an involuntary termination or reduction in hours between October 1, 2019 and September 30, 2021. The Act required the Department of Labor to issue model notices that plan administrators could use to meet the various notification requirements, and earlier this week, those model notices arrived.
The model notices include a new ARPA General Notice and COBRA Continuation Coverage Election Notice, a separate COBRA Continuation Coverage Notice in Connection with Extended Election Periods, and a Notice of Expiration of Period of Premium Assistance.
The new General Notice can be used for qualified beneficiaries who lose coverage due to a reduction in hours or an involuntary termination of employment between April 1 and September 30, 2021. It can be provided as a separate document in addition to the standard COBRA election notice, or it may be incorporated into the standard notice.
The Notice in Connection with Extended Election Periods should be sent to all assistance eligible individuals who are still in their 18-month COBRA window as of April 1, 2021 and must be provided no later than May 31, 2021. Finally, the Notice of Expiration must be sent to all assistance eligible individuals 15-45 days before their COBRA subsidy will expire.
The DOL clarified that none of the various extended time periods related to the COVID-19 national emergency apply to the notice requirements and election periods stipulated under ARPA. This means that if an eligible individual does not exercise his/her election rights within 60 days of receipt of the new notices, the rights to the subsidy will be forfeited. COBRA administrators would be well advised to send their election notices with proof of delivery so that they have a record of the date on which the election period ends.
What this also means is that plan administrators do not have any grace related to the deadlines for providing the notices mentioned above. A failure to provide a timely notice could result in an excise tax of up to $100 per qualified beneficiary, not to exceed $200 per family, for each day that the notice is late or not provided.
As a reminder, even if you are using a COBRA administrator, the responsibility for providing the subsidy and complying with the notification deadlines ultimately lies with the plan sponsor. Employers should check with their administrators to make sure they are prepared to meet these new requirements.
Accompanying the model notices was a set of FAQs that clarify some of the finer points of the Act. Notably, the FAQs confirm that eligibility for coverage under another group health plan, including that of a spouse’s employer, will disqualify the employee from the subsidy. Further, the FAQs make clear that the subsidy also applies to small employer plans that are not subject to COBRA but are subject to a state “mini-COBRA” law, as well as plans sponsored by state and local governments that are subject to continuation under the Public Health Service Act.
The model notices and FAQs can be found on the DOL’s new COBRA Premium Subsidy guidance page here.