As discussed in our prior post, the American Rescue Plan Act (ARPA) provides free COBRA coverage to “Assistance Eligible Individuals” (“AEIs”) who lost (or who lose) healthcare coverage due to a reduction in hours or involuntary termination. The COBRA coverage is available from April 1, 2021 through September 30, 2021 (“ARPA COBRA subsidy period”).
Among other requirements, employers must notify AEIs about the expiration of their subsidy at least 15 days (and no more than 45 days) before their ARPA subsidy is set to expire. As the end of the ARPA COBRA subsidy period approaches, we want to remind employers that they are required to provide this notice between August 16, 2021 and September 15, 2021 to AEIs whose subsidy will end September 30, 2021; therefore, employers should check with their COBRA vendors to ensure this notice is being timely provided.
Notice of Expiration of COBRA Subsidy
Employers must notify AEIs about the expiration of their subsidy, the date of expiration, and that the individual may be eligible for coverage without the subsidy through COBRA or another group health plan (“Notice”). The Department of Labor (DOL) has provided a Model Notice of Expiration of Period of Premium Assistance that employers can use to fulfill this requirement.
The Notice must be provided to AEIs whose subsidy is going to expire, unless the expiration is due to the AEI becoming eligible for coverage under another group health plan. The deadline to provide the Notice is at least 15 days, and no earlier than 45 days, before an AEI’s subsidy will expire, which is the earlier of September 30, 2021 (the end of the ARPA COBRA subsidy period) or the date an individual’s maximum COBRA coverage period runs out.
This means that, for AEIs whose COBRA coverage is not exhausted before September 30, 2021, employers must provide the Notice between August 16, 2021 and September 15, 2021. Since most employers use a COBRA vendor to administer the required ARPA notices, employers should check with their vendor to ensure the Notice is being sent out by the required dates, as employers remain liable for any failure to provide the required notices.
Employers should do the following:
- Check with their COBRA vendor to ensure AEIs are receiving the Notice of Expiration of Period of Premium Assistance by the applicable deadline (or the employer must send the Notice if their vendor is not assisting with this);
- Be sure to claim any ARPA tax credits in their quarterly tax filing (for COBRA subsidies provided between July 2021 through September 2021, the tax credits should be claimed on the quarterly filing due October 30, 2021). For more on obtaining ARPA tax credits, see our blog.
- DOL Model Notice of Expiration of Period of Premium Assistance
- Sequoia Foreword’s: