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On April 7, 2021, the U.S. Department of Labor (DOL) issued much needed guidance to employers and their COBRA administrators on the “COBRA premium subsidy” provision of the American Rescue Plan Act (ARPA). This provision requires employers to subsidize COBRA coverage for Assistance Eligible Individuals (AEIs) and their beneficiaries and to provide notice to AEIs who are losing their health care coverage and are eligible for COBRA premium assistance.
Review of Federal COBRA Subsidy
Under the ARPA, the federal government will pay 100% of COBRA insurance premiums from April 1, 2021 through September 30, 2021 for individuals who lose health coverage due to a qualifying event, such as a reduction in hours or involuntary termination of employment. In short, this subsidy applies to anyone who lost health insurance through a qualifying event within the past 18 months, even if it was unrelated to the COVID-19 pandemic.
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As discussed in our prior post, under the American Rescue Plan Act of 2021, certain individuals who are eligible for COBRA coverage as a result of an involuntary termination of employment or reduction in hours may be eligible to receive a 100% subsidy for COBRA coverage for a six-month period beginning April 1, 2021 through September 30, 2021 (“COBRA Premium Subsidy”). Last week, the Department of Labor (“DOL”) released “frequently asked questions” (FAQs) and model notices related to the COBRA Premium Subsidy.
FAQs
Eligibility for Other Group Coverage
Individuals who are eligible for Medicare or other group health coverage, such as through a new employer’s plan or a spouse’s plan are not eligible for the COBRA Premium Subsidy. The FAQs make clear that eligibility for Medicaid or individual health insurance coverage through the Affordable Care Act marketplace does not disqualify an otherwise eli
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As discussed in a previous alert, The American Rescue Plan Act (ARPA) provides 100% subsidized premiums for health care continuation coverage under COBRA for eligible individuals and their dependents.
The subsidized premiums are available from April 1, 2021, through September 30, 2021 (the “Premium Assistance Period”), unless earlier terminated as discussed below.
The Department of Labor (DOL) was charged with preparing model notices for employers, plan administrators, or insurance companies to send to eligible individuals, advising them of their rights in connection with the free COBRA subsidy. The following notices were made available on April 8, 2021 (DOL Resources on COBRA Premium Subsidy). Employers are encouraged to use the model notices.
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On April 7, 2021, the U.S. Department of Labor (DOL) issued welcome guidance–including eagerly-anticipated model notices–to help employers and their COBRA administrators implement the temporary six-month (April 1 to September 30, 2021) COBRA premium subsidy provided under the American Rescue Plan Act of 2021 (“ARP”) with respect to certain individuals who have lost or who will lose employer-sponsored group health coverage due to a reduction in hours or involuntary termination of employment.
DOL Guidance Packet. The DOL’s guidance packet consists of the following items:
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A COBRA Premium Subsidy dedicated web page, available at https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra/premium-subsidy, providing not only guidance about the ARP COBRA premium subsidy, but also previously-issued COBRA guidance for individuals (including
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Group health continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) permits certain group health coverage to be continued by participants and beneficiaries (“qualified beneficiaries”) when coverage is lost due to certain “qualified events,” such as termination of employment or a reduction of hours.
Under Section 9501 of the American Rescue Plan Act of 2021 (“ARPA”), an “assistance eligible individual” (“AEI”) is not required to pay the cost of COBRA coverage (“COBRA Subsidy”) for the period beginning April 1, 2021 through September 30, 2021 (“Subsidy Period”). The Employee Benefits Security Administration has issued guidance, including Frequently Asked Questions (“FAQs”) and Model Notices related to the COBRA Subsidy. Employers offering COBRA are required to provide the COBRA Subsidy to any AEI, which they then can recoup through a payroll tax credit