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DOL Issues FAQs About American Rescue Plan’s COBRA Subsidy

On April 7, 2021, the U.S. Department of Labor (DOL) issued Frequently Asked Questions (FAQs) related to the COBRA premium assistance provisions of the American Rescue Plan Act (ARPA). ARPA provides a 100% subsidy for COBRA premiums for eligible individuals who lost group health coverage due to a reduction in hours or involuntary termination of employment. The subsidy period begins on April 1, 2021 and ends on September 30, 2021.

The guidance is designed to answer questions that “assistance eligible individuals” (AEIs) may have regarding the COBRA subsidy. Specifically, the FAQs cover topics concerning eligibility, how to apply for premium assistance, how to change coverage options if permitted by an employer, timelines for enrolling, and how to obtain more information about the COBRA subsidy program. However, the FAQs do not include responses to some administrative questions that have been asked by employers, such as specifics regarding the definition of an involuntary termination. Employers should review the DOL’s FAQs to ensure compliance with the ARPA, especially with respect to new plan notice obligations.

The COBRA guidance also includes model notices, which include a model general notice, an extended election period notice, an alternative notice and an expiration of premium assistance notice to be used by employers to satisfy the COBRA notification requirements of ARPA. The notices must be provided to AEIs before May 31, 2021.

The model notices issued by the DOL will be a helpful resource for employers and plan sponsors in updating their current notices as well as preparing new notification documents.

Read the HR Compliance Bulletin.

Contact your Cowden representative for more information on this or other compliance issues.