The American Rescue Plan Act (ARPA) provides COBRA premium assistance to eligible individuals and imposes notice requirements on health plans. One such requirement is that plans must notify eligible individuals about when their premium assistance ends, and whether they may be eligible for regular COBRA coverage or coverage under another group health plan.
The ARPA requires the full cost of COBRA premiums from April 1, 2021, through Sept. 30, 2021, to be subsidized for certain assistance-eligible individuals whose work hours were reduced or whose employment was involuntarily terminated. The subsidies are reimbursed directly to the employer, plan administrator, or insurance company (as applicable) through a COBRA subsidy tax credit.
Notice of Subsidy Expiration
The notice of premium subsidy expiration must be provided during the 45 – 15-day period before an individual’s subsidy expires. This means that, for individuals whose subsidy is expiring due to the end of the subsidy period, the notice must generally be provided from Aug. 16, 2021, to Sept. 15, 2021. Otherwise, the due date will depend on when an individual’s maximum COBRA coverage period ends.
Plans are not required to issue an expiration notice to individuals whose subsidy is expiring because they became eligible for other group health plan coverage or Medicare.
Notice Content Requirements
The notice of premium subsidy expiration must be written in clear and understandable language, and inform recipients that:
- The premium assistance will expire soon, prominently identifying the expiration date; and
- The individual may be eligible for coverage without premium assistance through regular COBRA coverage or coverage under a group health plan.
The U.S. Department of Labor (DOL) has issued a model notice of expiration of premium assistance that can be used to satisfy this requirement. This model notice is linked below.
Action Steps for Employers
Check with your COBRA administrator to verify they are sending this notice on your behalf. For groups subject to state continuation, even though insurers were responsible for providing 100% premium assistance for eligible individuals enrolled in continuation of coverage, insurers will not be sending required notices.
If you have questions related to this update, please contact your North Risk Partners advisor. Don’t have an advisor? No problem. We’ll help you find one.
This regulatory update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
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