|Q: Has the Department of Labor (DOL) released any additional guidance or model notices for COBRA subsidies under the American Rescue Plan?|
|A: The DOL released “Frequently Asked Questions” for Premium Assistance under the American Rescue Plan Act of 2021(ARP) and the model notices for COBRA subsidies on April 7, 2021 on the COBRA Premium Subsidy page. The subsidy is for assistance eligible individuals (AEIs) who lost health insurance coverage due to reduction of hours or loss of job during the pandemic. The loss of coverage does not have to be related to the pandemic. The subsidy does not extend the amount of time an AEI is eligible for COBRA.|
The COBRA subsidy is for 100% of the cost of the plan the employee and or dependents were enrolled in before the Qualifying event for the period beginning April 1, 2021 through September 30, 2021. The guidance clarified that the subsidy applies to all group health plans, (including dental and vision) that are covered by COBRA except for Flexible Spending Arrangement and excepted benefits. The premium assistance is also available for group health insurance required under state mini-COBRA law, but the ARP does not change any requirements of coverage of a state continuation program.
The FAQ again stated that the subsidy is not available for individuals who are eligible for other group coverage or Medicare, who voluntarily left employment or terminated due to gross misconduct. If an employee becomes eligible for Medicare or another group plan, the AEI must notify the plan administrator that they are no longer eligible. Failure to do so can result in a tax penalty for the individual.
If an AEI has already paid for coverage for any month between April 2021 and September 2021, the guidance instructs the employee to contact the plan administrator to discuss credits against future payments or a refund. The FAQ also addresses the AEI is not to be charged administrative fees when eligible for the subsidy.
Employers will be able to claim the credits against their Medicare and FICA Payroll taxes on Form 941. The IRS will be providing further guidance on the credits under rules set by the Treasury Department.
Employers are required to: Have special enrollment period for AEIs regardless if they elected COBRA when initially eligible. This includes dependents and spouses. The participant must return the form to receive the subsidy. Provide the Notice of Availability to AEI as soon as possible but no later than June 1st. Provide Notice of Expiration 45 days before and AEI’s subsidy expires. Employers should work with their COBRA administrators to ensure all AEI receive their notices.