The U.S. Department of Labor has released guidance to help employers comply with the COBRA premium subsidies associated with the American Rescue Plan Act.
The guidance has information on implementing the plan’s provisions to provide full COBRA premium assistance to certain individuals who were involuntarily terminated from employment or had their hours cut.
The guidance includes documents prepared with the Treasury and Health and Human Services departments to implement the provisions, such as frequently asked questions, model notices, and the Federal Register notice.
COBRA allows employees and their families who would otherwise lose their group health coverage due to certain life events to continue coverage.
The act provides a 100% premium subsidy between April 1 and Sept. 30, 2021 for individuals whose reduction in hours or involuntary termination makes them eligible for COBRA coverage during this period.
Group Health Plans
The legislation also requires group health plans to provide notices to individuals losing health coverage to inform them about COBRA coverage assistance that may be available.
The model notices are designed to help group health plans and employers comply with the new requirements and provide important information to individuals as they make critical healthcare choices for themselves and their families.
Employers should start the notification process by contacting COBRA vendors and administrators to ensure each affected employee gets the appropriate notice, including those eligible for a second chance notice, which must be sent by May 31, 2021.
Affected employees have 60 days from when they receive the notice—not from the notice date—to enroll in COBRA coverage.
In cases where employers provide affected employees with the option to enroll in other, less expensive coverage, employees have 90 days from the date they receive notice to enroll in the other coverage.
Questions on eligibility for the rescue plan’s premium subsidies or on the model notices may be directed to the Department of Labor's Employee Benefits Security Administration.