13 Apr DEPARTMENT OF LABOR PROVIDES GUIDANCE REGARDING COBRA SUBSIDY REQUIREMENT UNDER THE AMERICAN RESCUE PLAN ACT
As a quick recap, the American Rescue Plan Act of 2021 (“ARPA” or the “Act”) recently passed into law requires all employers to whom COBRA applies to offer free COBRA coverage for up to six months to workers who lost health insurance due to involuntary termination of employment or a reduction in hours. The requirement went into effect starting April 1, 2021. The free coverage is to be offset by tax credits to the entity providing the free coverage.
The new law requires prompt action from companies and health plan administrators. Specifically, employers are required to notify eligible individuals of their election options by May 31, 2021. This would include people who had previously declined COBRA benefits, or dropped them, whose COBRA period includes part of the ARPA subsidy period. Employers are also required to notify each AEI (Assistance Eligible Individual) no more than 45 days, but no less than 15 days before his or her subsidy termination date that their subsidized coverage will end.
The Department of Labor (the “DOL”), on April 7, 2021, published guidance and model notices regarding the Act’s requirements. Complete copies of the full FAQ’s and model notice forms can be obtained or viewed on the DOL’s website. Please visit: