Nearing the Finish Line, Upcoming Notice Deadline for COBRA Subsidies
The COBRA subsidy period under the American Rescue Plan Act (“ARPA”) is nearing its end. Under ARPA, an assistance eligible individual (“AEI”), which is a COBRA qualified beneficiary who becomes eligible for COBRA due to a reduction in hours or involuntary termination of employment, may be eligible for a COBRA subsidy equal to the entire COBRA premium for the period from April 1, 2021 through September 30, 2021. Employers and plan administrators are required to provide subsidy termination notices to AEIs before their COBRA subsidy ends.
Employers and plan administrators must send the subsidy termination notices to AEIs no more than 45 days and no less than 15 days before the date that the COBRA subsidy will end for the individual. For many individuals, this means that these notices must be sent between August 16 and September 15 to reflect the end of the COBRA subsidy period on September 30, 2021.
The subsidy termination notices must include the following information:
- A statement that the COBRA subsidy will end soon and “prominent identification” of the date that it will end; and
- A statement that the individual may be eligible for coverage without a COBRA subsidy through COBRA or another group health plan.
The notice is not required if the COBRA subsidy is terminated due to eligibility for another group health plan or Medicare. The Department of Labor (“DOL”) has issued a model subsidy termination notice, which is available here. Use of the model notice is not required, but the DOL considers its use as good faith compliance with the notice requirements under ARPA.
Employers that sponsor group health plans should continue to work closely with their third-party COBRA administrators to ensure compliance with ARPA, and the DOL and IRS guidance regarding the COBRA subsidies. While we don’t typically recommend procrastinating, in this case, employers may want to delay sending the subsidy termination notice to AEIs who will lose the subsidy on September 30, 2021 (but not after the September 15 deadline) in case Congress extends the subsidy period. However, we have not heard any rumors of an extension at this point.
If you have any questions about the COBRA subsidies under ARPA, please contact one of the authors or another one of the Miller Johnson employee benefits attorneys.