2021 COBRA Notice Requirements - COVID

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law. Included in this legislation are important requirements related to COBRA. 

On April 7, 2021 the Department of Labor (DOL) released new COBRA model notices required under ARPA, as well as a Frequently Asked Questions (FAQ) document for the administration of COBRA subsidies. COBRA Qualifying Event notices have been updated in accordance with the new model notices. A summary  of employer requirements and important next steps for COBRA administrators may be found below. 

The American Rescue Plan Act (ARPA) subsidizes COBRA premiums for group health plans, excluding the FSA and Qualified Small Employer HRAs (QSEHRA), at 100% for Assistance Eligible Individuals (AEIs).  

·     Assistance Eligible Individuals (AEIs) are those who have been offered COBRA due to involuntary termination of employment or a reduction of hours, and who could have been covered under COBRA in April 2021 or later due to said Qualifying Event. 

·     The DOL’s FAQ defines an AEI as a COBRA Qualified Beneficiary who is eligible for COBRA by reason of a Qualifying Event that is a reduction of hours (such as reduced hours due to change in a business’s hours of operations, a change from full-time to part-time status, taking of a temporary leave of absence, or an individual’s participation in a lawful labor strike, as long as the individual remains an employee at the time that hours are reduced) or an involuntary termination of employment; and who elects COBRA continuation coverage.

·     In addition, an individual who elected COBRA and allowed coverage to lapse, but would have been eligible for coverage in April 2021, has the option to reinstate COBRA coverage effective April 1, 2021 to take advantage of the subsidy.

·     COBRA subsidies are available beginning on the first day of the month following the enactment of the American Rescue Plan Act (April 1, 2021), and will expire on September 30, 2021.

·     APRA does not extend the timeframe that COBRA benefits are available to a former employee and/or their covered dependents. If a qualified beneficiary’s COBRA period expires before September 30, 2021, the subsidy eligibility will also end. 

·     If an AEI’s COBRA eligibility period will extend beyond September 30, 2021, the qualified beneficiary will be responsible for paying the full COBRA premium due beginning October 1, 2021. 

·     COBRA Premium assistance provisions apply to all group health plans sponsored by private sector employers or employee organizations (unions) subject to the COBRA rules under ERISA. Provisions also apply to plans sponsored by State or local governments subject to the continuation provisions under the Public Health Service Act. Premium assistance is also available for group health insurance required under state mini-COBRA laws.

Employers will need to audit COBRA Qualifying Event (QE) reasons for events that were previously reported to identify potential Assistance Eligible Individuals (AEIs).