By Lauren Bikoff, MLS
The model notices provide assistance in ensuring plan compliance with requirements.
The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued frequently asked questions (FAQs) and model notices to help individuals and employers understand and implement the American Rescue Plan Act’s (ARPA) COBRA premium assistance provisions. Under ARPA, for individuals who experienced a layoff, reduction in hours, or a furlough, the federal government will pay 100 percent of COBRA premiums, between April 1, 2021 and September 30, 2021, by allowing them to stay on their employer-sponsored health plan at no cost.
Model notices. The ARPA requires group health plans to provide notices to individuals losing health coverage to inform them about the premium assistance that may be available to them. The EBSA has released several model notices.
The FAQs confirm that employers must send out notices to all qualified beneficiaries who have experienced a qualifying event that is a reduction in hours or an involuntary termination of employment from April 1, 2021 through September 30, 2021, to inform them of their rights under the ARPA. In addition, companies need to send notices to any assistance eligible individual who had a qualifying event before April 1, 2021, unless the individual’s maximum COBRA continuation coverage period would have ended before April 1, 2021 (generally, those with qualifying events before October 1, 2019). This notice must be sent by May 31, 2021.
Plans also have to provide individuals with a notice of the expiration of premium assistance 15 to 45 days before the expiration of the subsidies to explain that the subsidies will soon expire, the individuals’ ability to continue unsubsidized COBRA for any period remaining under the original 18-month coverage period, and describing other available coverage options (such as through Medicaid or the Affordable Care Act marketplace).
The FAQs confirm that unless specifically modified by the ARPA, the existing requirements for the manner and timing of COBRA notices continue to apply. Due to COVID-19, the DOL and IRS have issued guidance extending timeframes for certain actions related to health coverage under private-sector employment-based group health plans. These extensions do not apply to the notices or the elections periods related to the ARPA COBRA premium assistance. Therefore, the DOL notes that plans must provide the notices according to the timeframes specified by ARPA.
Coverage periods, eligibility. The FAQs discuss several additional issues related to the implementation of the COBRA subsidy. The guidance mentions several times that the subsidy is only for coverage periods from April 1, 2021 through September 30, 2021. Individuals may not receive refunds for any COBRA premiums paid before April 1. However, if an individual had already paid their COBRA premium for the month of April, the party to whom the payment was made must issue a credit or refund to the individual.
In addition, the FAQs note that eligibility for coverage under another group health plan, including that of a spouses’ employer, will disqualify the individual from receiving subsidized coverage. Individuals receiving COBRA premium assistance must notify their plans if they become eligible for other coverage. Failure to do so can result in a tax penalty of $250, or if the failure is fraudulent, the greater of $250 or 110 percent of the premium subsidy.
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