DOL updates COBRA notices to reflect subsidy mandate

Dive Brief:

The American Rescue Plan Act, signed into law by President Joe Biden March 11, obligates employers to cover the cost of COBRA group health coverage for eligible employees. The U.S. Department of Labor recently released guidance for employers regarding this element of the ARP, and it includes model notices employers can use to satisfy the requirement that they notify employees who are eligible for the assistance.
Plans and issuers must issue a number of notices, DOL said in guidance. All qualified beneficiaries who experience a reduction in hours or an involuntary termination between April 1 and Sept. 31 are owed a general notice. Eligible individuals are also due a notice of the extended COBRA election period by May 31. The ARP also requires plans and issuers to hand out a notice of expiration of periods of premium assistance 15 to 45 days before an individual's premium assistance expires.
While DOL provided model notice forms, it also outlined the information notices must communicate. Notices must include, for example, forms for establishing eligibility and contact information for plan administrators.

Dive Insight:

DOL's guidance provides a clear next step for employers, according to attorneys at management-side law firm Littler. "Employers should send out notice to all individuals who are eligible for the ARPA COBRA subsidy using the DOL notice form," the attorneys wrote in a blog post. Many employers will be able to delegate this task to their COBRA administrators, the attorneys said.

Employees are eligible for COBRA premium assistance if, from April 1 to September 30 of this year, they were eligible for COBRA because their hours were reduced or they were involuntarily terminated, and they chose to extend their health benefit coverage through COBRA, according to DOL. If an employee is eligible for other group health care coverage through a new employer's plan or a spouse's plan, the worker loses eligibility for premium assistance. Further, the employee is not eligible for coverage if the termination was due to gross misconduct.

Employers likely will be familiar with the concept of COBRA notices, as they've long been obligated to provide employees with information explaining their rights to elect COBRA within 30 days of a termination, a reduction or hours or another qualifying event. Outside of Biden's ARP, group health plans may require beneficiaries to pay for COBRA continuation coverage, though employers may choose to subsidize the cost, in part or in whole.