DOL Publishes COBRA Subsidy Notices and Limited FAQs

On Wednesday, April 7, 2021, the Department of Labor’s Employee Benefits Security Administration (EBSA) published a dedicated American Rescue Plan Act of 2021 (ARPA) COBRA subsidy web page. It includes:

• 10 pages of guidance addressing 21 frequently asked questions (FAQs)
  • Note these appear to largely be directed toward individuals, not employers
  • These FAQs may have been hastily developed, as:
    • Q&A #2 right away indicates the subsidy applies “to all group health plans,” but we know from the text of the ARP itself that the subsidy “does not include coverage under a health flexible spending arrangement”
    • Q&As #3 and 4 address the idea someone is ineligible when they are eligible or become eligible for other group health coverage but doesn’t fully explain how the timing of that works (for example, the FAQs do not explain what happens if you were eligible for other group coverage and just chose not enroll when you had the chance to and now you must wait for annual open enrollment; also, the FAQs don’t explain how a waiting period for other coverage impacts the timing of when you are disqualified from the COBRA subsidy, but the model cover page below does explain it)
  • It would appear they must still be working on employer guidance, which we expect to largely follow the 2009 ARRA COBRA subsidy guidance
• Several model notices, including:
  • A cover page (PDF or Word) to accompany these notices:
    • General COBRA notice (PDF or Word)
    • Extended election period notice (PDF or Word)
    • Alternative notice for state continuation (PDF or Word, with no clarity quite yet of whether the employer or insurer should be handling this…all we know is the 2009 guidance stated “the only person entitled to be reimbursed for the premium reduction through the payroll credit [was] the insurer”)
  • Notice of subsidy expiration (PDF or Word)
    • This is the one employers must provide 15 to 45 days prior to someone’s known subsidy expiration date

Note you’ll want to download the Word versions of these notices as they’ll require tailoring to reflect the specifics of your plan.  For example:

• You’ll indicate whether you’re allowing assistance eligible individuals (AEIs) to select a less expensive option than they had when they were full-time
• You’ll list the plan(s) and family members the AEI may elect to enroll
• If you are an employer with 20 or more employees, you’ll want to remove “entitlement to Medicare” from the revised general COBRA notice
• You also might want to limit “divorce or legal separation” to just divorce if you don’t treat legal separation as a qualifying event to disenroll a spouse during the plan year

While we may be waiting for more robust employer guidance, it would be prudent to start working with your COBRA administrator on how to tweak the model notice and get them mailed as soon as possible to AEIs you have identified.  Employers have until May 31, 2021, to provide the notices, but most employers will want to provide them much sooner than that in order to have coverage activated and ID cards promptly issued.  AEIs will have 60 days from the date the notice is postmarked to submit their elections (or 90 days if allowing them to select alternative coverage with a premium cost at or below the coverage they previously had).

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.