In March, the federal government passed the American Rescue Plan Act (ARPA), the third federal stimulus package enacted in response to the ongoing COVID-19 pandemic. Among its many provisions, the ARPA provided 100 percent premium subsidies for health insurance continuation under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) from April 1, 2021, through September 30, 2021. As the end date approaches, employers should remember that one more required notice must be sent to assistance-eligible individuals within a specific time frame.
As previously reported, the ARPA provided subsidies for certain individuals who become eligible for COBRA continuation coverage due to involuntary termination or a reduction in hours and provided a special second election opportunity for certain individuals who previously declined or dropped COBRA coverage but who would otherwise be eligible for COBRA as of April 1, 2021.
The ARPA also required employers send out special COBRA notices related to the subsidy, for which the U.S. Department of Labor (DOL) provided model notices and guidance. As the ARPA’s COBRA subsidy period comes to an end on September 30, 2021, plan administrators should ensure they comply with the last of ARPA’s notice requirements — the notice of expiration.
Specifically, plan administrators are required to notify assistance-eligible individuals regarding the end of their subsidy no less than 15 days and no more than 45 days in advance. For most assistance-eligible individuals, their subsidy period will end when the general COBRA subsidy expires on September 30, meaning these notices must be sent no later than September 15, 2021.
However, an individual may be eligible for the premium subsidy beyond September 30 in certain instances. IRS guidance clarifies that the subsidy continues until the end of the last “period of coverage” beginning on or before September 30, so depending on when the premium is assessed and how long the coverage period is, the period of coverage may extend beyond September 30 (See IRS Notice 2021-31, Q-47 for example).
Plan administrators can utilize the DOL’s Model Notice of Expiration of Premium Assistance to ensure that they provide all the necessary information. And, to make sure they send out expiration notices on time, plan administrators should also take a close look at the timing of their subsidy coverage periods and consult with legal counsel if necessary. Businesses that don’t administer COBRA internally should check in with their plan administrators to make sure these notices are being sent out.