Making Sense of the ARP COBRA Subsidy Notification Requirements in 2021

​As detailed in a previous article, President Biden signed into law the American Rescue Act (ARPA) on March 11th. 

​As part of this newly approved legislation, the US Government will be subsidizing 100% of COBRA premiums for six months, from April 1, 2021 through September 30, 2021, for any eligible participant who experienced an Involuntary Termination or a Reduction of Hours qualifying event.
U.S. legislators tasked the Department of Labor with providing the FAQs and Model Notices that pertain specifically to the ARPA COBRA subsidy and they gave the DOL a deadline of April 10th to publish the further guidance. On April 7, 2021, just three days before the deadline, the Federal Agencies released further guidance such as new model notices, and FAQs.
While the ARP may have alleviated some of the financial impact of the pandemic for COBRA members on a national level, it certainly did not come with simple instructions. Many HR professionals, insurance professionals, and employee benefits administrators have been reviewing the new guidance, hoping to make heads or tails of what is required by Plans, and what the deadlines are for each task.
In this article, we’ve tackled some of the complicated aspects of the ARP COBRA Premium Assistance, in hopes to simplify what employers and employee benefits professionals need to be doing in terms of providing the appropriate notifications to meet compliance requirements.

Notify, Rinse, Repeat.
The ARP came with much more complexity than its 2009 ACA predecessor – the original COBRA subsidy during the recession. We’ve broken down the notification requirements into five types of notices which must be sent to certain groups of Qualified Beneficiaries. These notices were to be implemented by April 1st, and the Agencies mandated that all “second chance notices” (see below) be sent by Plans no later than May 31st, 2021. Employers and TPAs have their work cut out for them in the days and weeks ahead!
General Notice and COBRA Continuation Coverage Election Notice
Think of this as the COBRA Election Notice and ARP Premium Assistance notice all wrapped into one. This notice must be issued by Fiduciaries (or their Third-Party Administrators) to all COBRA Qualified Beneficiaries who have qualifying events that are a reduction in hours or an involuntary termination of employment from April 1, 2021 through September 30, 2021.

• What does it include? The new COBRA election for April 1 events and forward should include plenty of information about the ARP Premium Assistance, and explain what the ARPA is.

It should inform qualified beneficiaries of the subsidy, explain who is eligible, and for how long. It should also explain how to elect COBRA in conjunction with the subsidy and how to apply for Treatment as an Assistance Eligible Individual. Finally, the notice should include all COBRA provisions, information and requirements based on ERISA/DOL guidance in prior model notices from 2020, with the appropriate forms that individuals will need for electing COBRA or requesting the subsidy.

• Who gets this notice? Those individuals who experience Qualifying Events from April 1st through Sept 30, 2021.
• Who has to send it? Any employer subject to Federal COBRA, and any small-group employer subject state continuation laws (vary by state)**. Note that national administrators like CobraHelp can do this task on behalf of the employer.

 
COBRA Continuation Coverage Notice in Connection with Extended Election Period (aka the “Second Chance Election Notice”)
This notice is like a second bite at the apple for those who were offered COBRA previously. For example, Assistance Eligible Individuals who were already notified of their COBRA right to elect, due to a COBRA event prior to April 1st 2021 would receive this notice advising them that the ARP Premium Assistance is available in 2021 and provide them with all the details.

• Who gets the notice? This “second chance notice” is intended for any Assistance Eligible Individual (or any individual who would be an Assistance Eligible Individual if a COBRA continuation coverage election were in effect) who had a qualifying event before April 1, 2021. This requirement does not include those individuals whose maximum COBRA continuation coverage period, if COBRA had been elected or not discontinued, would have ended before April 1, 2021 (generally, those with applicable qualifying events before October 1, 2019). This notice must be provided within 60 days following April 1, 2021 (that is, by May 31, 2021).
• What’s included? This notice is filled with information about alternative coverage options, like the health insurance marketplace and Medicaid, but it also explains to the qualified beneficiary (and any eligible dependents) that they can “re-elect” COBRA or in some instances elect COBRA for the first time without having to be responsible for retro-premiums. The notice has to explain the ARP premium assistance in detail, and advise potential COBRA members how to elect, where to send the completed documents, and how payment will work when the subsidy ends this September.
• What’s special about it? Some plans will allow the COBRA beneficiaries to change to a less expense or equal cost medical plan. This is optional (up to the Fiduciary) under the new law. The notice should explain how to change plans, and provide a form for doing so in case the beneficiary wants to utilize that option. Additionally, those AEI’s who were previously enrolled in COBRA continuation coverage, such as dental, and dropped the dental coverage can now add that coverage back. Dependents who were covered at the time of the original event can now be added back as well, because they are still considered qualified beneficiaries under COBRA, and because the ARPA recognizes them as Assistance Eligible Individuals (if the employee meets all other requirements).
• Who has to send it? Any employer subject to Federal COBRA.

 
Alternative Notice**
The Alternative Notice is purposed for those Plans that are subject to state continuation requirements (aka mini Cobra) from April 1, 2021 through September 30, 2021.  This notice is the only notice required for the purposes of informing beneficiaries of their continuation coverage rights and ARP information during the subsidy period. What this means is that the “second chance election notice” is NOT sent for state continuation coverage because the ARP does not alter pre-existing state continuation coverage rules.

• This notice must be sent by May 31st by those Plans which intend on using it in place of the COBRA Election Notice we covered earlier.

• Who has to send it? Employers not subject to Federal COBRA, but who are subject to state continuation laws or mini cobra.

​Model Notice of Expiration of Premium Assistance
This notice addresses the ARPA requirement that plans and issuers provide individuals with a notice of expiration of periods of premium assistance explaining that the premium assistance for the individual will expire soon, the date of the expiration, and that the individual may be eligible for coverage without any premium assistance through COBRA continuation coverage or coverage under a group health plan.

• When is it sent? This notice must be provided 15 - 45 days before the individual’s premium assistance expires.
• Who sends it? Any employer subject to the ARPA (COBRA/state continuation groups).

 
Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021
Although defined as a “summary” of the ARPA COBRA premium assistance provisions, essentially this notice is to be used by individuals who believe they qualify for the subsidy, which alternatively could be described as a “Request for Treatment as an Assistance Eligible Individual”.

• What’s it sent with? Fiduciaries are encouraged to include this form with the COBRA-ARP related notices described above, as it gives Assistance Eligible Individuals a summarized explanation of what assistance they may be entitled to as well as form in order to request the subsidy. It also informs the qualified beneficiary that he or she is responsible for advising the plan when or if such a time comes that he or she is NOT eligible for the assistance, such as when new job coverage is obtained or when a participant enrolls into Medicare.
• Who should it be sent to? This notice should be sent TO ALL QUALIFIED BENEFICIARIES regardless of their event type from April 1st through September 30th, 2021. It can be included in the COBRA Election Notice.
• Who sends it? Employers should notify their employees of these provisions. Alternatively, they can utilize an Expert such as CobraHelp to handle these notifications.

Addressing the ARP in a General Notice (Initial Rights Notice)
The Initial COBRA Notice, often called a General Notice, is a requirement of plans subject to Federal COBRA, and informs all newly insured employees and their newly insured spouses of COBRA rights before an event ever occurs. It’s like a “heads up” to active employees in case they should ever experience a COBRA event like reduced hours or divorce.  Employers are encouraged to make a good faith effort in informing potential qualified beneficiaries of the ARP subsidy by adding information about the ARP (and other laws that work in conjunction with COBRA) to their general notices. This is not addressed in the further guidance by the U.S. DOL specifically, but it cannot hurt for fiduciary parties and benefits professionals to ensure that employees have the information they need when it comes to the complexities of continuing coverage after employment or when an unexpected life event happens, like the passing of an employee, or a divorce/legal separation. 
FAQs and Related Information
We have provided additional information on the subsidy right here on the CobraHelp website as well as some FAQs published by the Federal Agencies in early April 2021. Employers and Brokers seeking information on Fiduciary obligations under ARPA, are encouraged to review compliance information about the subsidy for plan administrators that can be found HERE as well. 

Call COBRAHelp Today!

Legal Disclaimer:
​The information in this website is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from CobraHelp. or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.