Guidance on ARPA COBRA Subsidy

Notice 2021-46 provides background information about the COBRA premium assistance, addresses several questions with specific examples and exceptions provided, and provides technical guidance on claiming the tax credit in connection with the subsidy.

Plan sponsors and issuers might need to amend their Form 941 filings if their previous interpretations of ARPA requirements resulted in incorrect filing.

The ARPA provides a temporary 100% COBRA premium subsidy for individuals who elect COBRA continuation coverage due to a loss of coverage resulting from any involuntary or voluntary reduction in hours or involuntary termination of employment. The COBRA premium subsidy will expire on September 30, 2021, unless an extension is granted. HR Service will provide any updates as they become available.

Notice of Expiration to AEIs of ARPA COBRA Premium Assistance

Under provisions of the American Rescue Plan Act (“ARPA”), COBRA administrators are required to provide Assistance Eligible Individuals (“AEIs”) with written notice of the date on which their COBRA subsidy will end. The notice must be provided no earlier than 45 days before the expiration date and no later than 15 days before that date.

AEIs whose premium subsidy will be ending on September 30, 2021, due to the expiration of the ARPA COBRA subsidy will need to be given a notice between August 16, 2021, and September 15, 2021. The notice is not required if an AEI’s subsidy ends as a result of becoming eligible for coverage under another group health plan or through Medicare rather than the expiration of the subsidy.

UPDATED

The U.S. Department of Labor has provided a model notice for those who wish to use it. The model notice must be filled out with plan-specific information, including:

• Date of notice
• Name(s) of qualified beneficiaries that the notice applies to
• Name of the plan or policy
• Whether the assistance-eligible individual is receiving the notice due to the end of their maximum period of continuation coverage or due to the end of the subsidy
• Date on which the maximum period of continuation coverage will end, or date of the end of the subsidy
• Monthly premium cost in order to maintain continuation coverage

Keep in mind, the expiration of the subsidy does not necessarily mean the assistance-eligible individuals will lose coverage – it just means they will pay the full cost of coverage.

For more information on the COBRA subsidy, including requirements for the expiration notice, visit https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra/premium-subsidy-for-employers-and-advisers