The Department of Labor Issues Model Notices and Additional Guidance Regarding the American Rescue Plan Act of 2021 100% COBRA Premium Subsidy

Purpose

We want to alert clients to the availability of Model COBRA Subsidy Notices and Frequently Asked Questions (the FAQs) issued by the Department of Labor (DOL) on April 7, 2021 in connection with the 100% COBRA premium subsidy available from April 1 until September 30 for group health plan participants who have lost their coverage due to an involuntary termination of their employment or a reduction in hours. The COBRA premium subsidy applies to any group health plan subject to the federal COBRA laws as well as to group health plans subject to state “mini-COBRA” laws. 

The FAQs provide answers to a number of key questions.

Enforcement

Employers or multiemployer plans will be subject to an excise tax under the Internal Revenue Code for failure to comply with the COBRA subsidy requirements. The excise tax will be up to $100 per qualified beneficiary, but not more than $200 per family, for each day of non-compliance. 

Election of the COBRA Premium Subsidy and the Extension of Benefit Plan Timeframes

COBRA premium subsidy eligible individuals enrolled in the individual market can prospectively switch to COBRA coverage with premium assistance. When the individual’s COBRA premium subsidy terminates, either because their COBRA period ends or the COBRA premium subsidy period ends, they may be eligible for a special enrollment period through the Marketplace or individual health insurance outside of the Marketplace. 

In addition, the DOL and the Department of Treasury previously issued COVID emergency relief extending timeframes for electing, among other actions, COBRA coverage. These extended timeframes do not apply to the election of the COBRA subsidy. Individuals eligible for the 100% COBRA premium subsidy must make their election within 60 days of receipt of the applicable COBRA subsidy notice or they will lose their right to receive the premium assistance. 

Model COBRA Subsidy Notices

The DOL provided the following Model Notices:

• General Notice and COBRA Continuation Coverage Election Notice for individuals who are newly eligible for COBRA between April 1st and September 30th. This notice can be provided separately or with the general COBRA notice.
• COBRA Continuation Coverage Notice in Connection with Extended Election Periods for individuals currently enrolled in COBRA, or who would be eligible for the COBRA premium subsidy if they had elected and/or maintained coverage.
• Summary of COBRA Premium Assistance which must be included with the Notices above. The Summary includes a form for applying for the COBRA premium subsidy, as well as a form for reporting eligibility for Medicare or other group health care.
• Notice of Expiration of Premium Assistance Period to be sent to COBRA premium subsidy recipients between 15 and 45 days before their COBRA premium subsidy ends. 

Plans that will not allow COBRA premium subsidy eligible individuals to change plan coverage options should delete this language from the model notices. 

The FAQs and the Model COBRA Subsidy Notices are available on the DOL website here.