09 Sep COBRA SUBSIDY Requirement UNDER AMERICAN RESCUE PLAN ACT ENDS ON SEPTEMBER 30, 2021
As a quick recap, the American Rescue Plan Act of 2021 (“ARPA”) passed into law in March 2021. One aspect of ARPA 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 six-month subsidy requirement is set to expire on September 30, 2021. Importantly, the ARPA required employers to notify each “assistance eligible individual” (employees who lost group coverage due to reduced hours or involuntary termination and who elect coverage) no more than 45 days, but no less than 15 days, before his or her subsidy termination date that their subsidized coverage is about to end. For most individuals still receiving subsidized coverage, this means they must be notified of the September 30 termination date no later than September 15, 2021. No notice is required, however, to those individuals whose premium assistance expires due to their eligibility for another group health plan or Medicare.
The expiration notice must specify that (1) premium assistance for the individual is about to expire, (2) the date of the expiration, and (3) that the individual may be eligible for coverage without any premium assistance through COBRA continuation coverage or coverage under a group health plan, Medicaid, or the Health Insurance Marketplace. The U.S. Department of Labor (the “DOL”) published guidance and a model form employers may utilize in providing notice of the expiration of ARPA’s premium subsidy. This model notice form can be obtained or viewed on the DOL’s website, please visit:
Clients should feel free to contact the attorneys of Masud Labor Law Group with any questions or concerns.