On April 7, 2021, the Department of Labor released new guidance for the extension of COBRA benefits under the recently passed American Rescue Plan Act of 2021 (ARP).
COBRA continuation coverage provides group health plan benefits to individuals who were recently terminated or subject to a reduction in hours that caused a loss of health care coverage. COBRA generally applies to all private-sector group health plans maintained by employers with at least 20 employees. The American Rescue Plan provides “premium assistance” under COBRA that will allow for the extension of coverage COBRA benefits, without requiring individuals receiving COBRA to pay premiums. Employers will be entitled to a tax credit for the amount of premium assistance. To be eligible for the new premium assistance, an individual must experience a loss of health care coverage during the period April 1, 2021 through September 30, 2021, and elect to take COBRA.
Employers and plan administrators will likely ask whether there are any new notice requirements as a result of this extension of coverage. The answer is yes. While the existing requirements for the manner and timing of COBRA notices will continue to apply, issuers of benefits will be required to provide the following new information:
- A general notice to all qualified beneficiaries who have a qualifying event that is a reduction in hours or an involuntary termination of employment from April 1, 2021 through September 30, 2021. This notice may be provided separately or with the COBRA election notice following a COBRA qualifying event.
- A notice of the extended COBRA election period to any Assistance Eligible Individual (or any individual who would be an Assistance Eligible Individual if a COBRA continuation coverage election were in effect) who had a qualifying event before April 1, 2021. This requirement does not include those individuals whose maximum COBRA continuation coverage period, if COBRA had been elected or not discontinued, would have ended before April 1, 2021 (generally, those with applicable qualifying events before October 1, 2019). This notice must be provided within 60 days following April 1, 2021 (that is, by May 31, 2021).
- A notice of expiration of periods of premium assistance, explaining that the premium assistance will expire soon, the date of expiration, and that the individual must be eligible for coverage (without premium assistance) through COBRA. The notice must be provided 15-45 days before the individual’s premium assistance expires.
Fortunately, the DOL has provided model notices for employers, available here. A general COBRA FAQ for employers is available here.