The American Rescue Plan Act provides a 100% COBRA premium subsidy for certain individuals entitled to COBRA due to reduction of hours or involuntary termination of employment. To be eligible for the subsidy, the COBRA qualified beneficiary must have a qualifying event that is a reduction in hours or involuntary termination of employment, elect COBRA, elect to be considered an assistance-eligible individual, and not be eligible for other group health coverage or Medicare.
The Department of Labor released guidance on communicating the new COBRA premium subsidy. This guidance includes model notices, a form an individual must use to request the subsidy and document eligibility, and a summary of the premium assistance rules. Employers will have to provide the following notices relating to the premium subsidy:
- Qualifying Event Letter. Qualifying event letters must be modified to include language about the premium assistance and information on the right to request treatment as an assistance-eligible individual.
- New Extended Election Period Notice. A new notice must be sent to individuals with a qualifying event of reduction of hours or involuntary termination of employment occurring 11/1/2019 or later who elected and dropped COBRA; never elected COBRA; or are in a non-payment status. This new notice provides information about electing coverage and requesting to be treated as an assistance-eligible individual.
- New Notice to Existing Continuants. A new notice must be sent to ongoing COBRA continuants whose qualifying event was a reduction of hours or involuntary termination of employment. This notice describes the premium assistance and gives the person information about requesting to be treated as an assistance-eligible individual.
- New Notice Upon Expiration of Premium Assistance. A new notice must be sent to an assistance-eligible individual 15 to 45 days before their premium assistance will be expiring.
Employers should make sure their COBRA administration complies with the new notice requirements. BAS’ Cobra Control Services is updating existing COBRA notices and implementing the new notice requirements for administration of the new American Rescue Plan Act COBRA premium subsidy.