The Department of Labor (DOL) issued an FAQ on April 7, 2021 relative to the application of COBRA subsidies authorized under the American Rescue Plan Act of 2021 (ARPA). The information below summarizes the content of the FAQ.

Model Notices

The DOL has provided the following model notices:

• General and Election Period Model Notice – For use of COBRA qualifying events occurring between April 1, 2021 and September 30, 2021.
   
• Extended Election Period Model Notice – To be provided to those currently enrolled in COBRA coverage or for those who must be given a second opportunity to enroll in COBRA coverage.
   
• Alternative Election Model Notice – For use by plans subject to state continuation coverage laws.
   
• Subsidy Expiration Model Notice – To be distributed 15-45 days prior to the expiration of subsidies.
   
• Request for Treatment as an Assistance Eligible Individual Model Form – Form used to attest to eligibility for subsidies and enroll in such coverage.

In general, notifications must be distributed by May 31, 2021 letting the appropriate individuals know about the potential availability of COBRA subsidies between the dates of April 1, 2021 and September 30, 2021.

State Continuation Coverage

The FAQ confirms subsidies are available for group health plans subject to a state continuation coverage law; however, the ARPA does not change any state continuation coverage rules or regulations (e.g., deadlines to elect state continuation coverage). States may need to pass legislation or issue regulations to maximize the availability of subsidies for state continuation coverage.

Qualifying Events

Involuntary termination of employment qualifying events may entitle a person to subsidies. The FAQ confirms that any reduction in hours qualifying event (i.e., voluntary or involuntary) may also entitle a person to subsidies.

Eligible Plans

The FAQ confirms non-health insurance plans are also eligible for COBRA subsidies, such as dental, vision or Health Reimbursement Arrangement (HRA) coverage.

Other Coverage

If a person is eligible for Medicare or another group health plan, they are not eligible for COBRA subsidies. The FAQ provides two examples of being eligible for another group health plan that would disqualify a person from receiving subsides. The first example is being eligible for a group health plan from a new employer. The second example is being eligible for coverage under a spouse’s group health plan.

Marketplace Coverage

The FAQ confirms that a person can drop Marketplace coverage (subsidized or unsubsidized) and take advantage of the COBRA subsidies.

EBSA Disaster Relief Notice 2021-01

The FAQ confirms the extensions to elect COBRA coverage authorized under EBSA Disaster Relief Notice 2021-01 do not apply to the election period to take advantage of COBRA subsidies. Individuals eligible for COBRA subsidies will have 60 days to elect such subsidized coverage.

Second Election Period

The FAQ validates the need to offer a second opportunity to enroll in COBRA for reduction in hours or involuntary termination of employment qualifying events (i.e., loss of coverage dates) dating back to November 1, 2019. Coverage will be effective as of April 1, 2021.

Additional Guidance

While the FAQ provided by the DOL is helpful, it still does not address many questions. For example, the subsidy reimbursement process to employers and insurance carriers has still not been addressed. We expect more guidance will be issued at a later date.