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COBRA Premium Subsidies Come Into Focus Though Still a Bit Fuzzy

Since our most recent Bulletin, the U.S. Department of Labor (DOL) issued clarifying guidance on the COBRA premium subsidy provisions in the American Rescue Plan Act of 2021 (ARPA). Because much of what the DOL recently issued is covered in our prior Bulletin, we have included only the key takeaways and clarifications in the new guidance below:

  • The DOL has created a COBRA premium subsidy website intended as a clearinghouse for information relating to the implementation of the COBRA premium subsidy program and COBRA in general.
  • For group health plan sponsors required to notify COBRA qualified beneficiaries of ARPA’s premium assistance by May 31, 2021, the DOL has created model notices which can be found here. Use of the model notice is considered a good-faith compliance with ARPA’s COBRA premium subsidy notice requirements.
  • In addition to the required notice, the DOL instructs group health plan sponsors to provide qualified beneficiaries with a copy of the DOL’s Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021. Included as part of the summary is a Request for Treatment as An Assistance Eligible Individual Form to be submitted by a COBRA qualified beneficiary who believes he or she is entitled to COBRA premium assistance.
  • Failure to comply with ARPA’s COBRA premium subsidy provisions could result in the imposition of an excise tax of up to $100 per qualified beneficiary (or $200 per family) for each day of noncompliance.
  • A prior COBRA coverage election extension implemented as a response to the COVID-19 National Emergency is not related to an election for ARPA’s COBRA premium subsidy.
  • The COBRA premium subsidy also waives administrative fees that could otherwise be charged to a qualified beneficiary enrolled in COBRA coverage.
  • The COBRA premium subsidy is applicable only to premiums for coverage periods from April 1, 2021, through September 30, 2021. COBRA qualified beneficiaries who paid premiums for a prior period will not be eligible for a refund.

Although the recent clarifications are welcome, a number of questions still remain and additional guidance from the DOL is anticipated.

What Should Group Health Plan Sponsors Do Now?

Group health plan sponsors should do the following:

  • Identify employees or former employees who lost eligibility for coverage in the sponsor’s group health plans because of an involuntary termination of employment or reduction in hours.
  • Work with health plan and COBRA administrators to roll out distribution of the required COBRA premium assistance notices and summary to premium assistance eligible COBRA qualified beneficiaries. Use of the DOL’s model notice is encouraged.
  • Monitor the DOL’s premium assistance website for further guidance.

For more information on this issue, contact Devin M. Karas.

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Devin M. Karas
410-576-4171 • dkaras@gfrlaw.com







Karas, Devin M.