Keenan Briefings

Briefing

DOL Issues FAQ & Model Notices to Implement COBRA Subsidy Provisions

• The DOL released FAQ and model notices to implement the COBRA subsidy provisions in the ARPA
• The FAQ guidance clarifies a number of questions employers have been asking

On April 7, 2021, the U.S. Department of Labor (DOL) released Frequently Asked Questions (FAQ) and model notices to implement the COBRA subsidy provisions in the American Rescue Plan Act of 2021 (ARPA).

The FAQ guidance address a number of the questions that employers have been asking since ARPA was signed into law. Specifically, the guidance clarifies:

• The subsidy applies to persons who have lost coverage due to either a reduction in hours or an involuntary termination. The termination must be involuntary in order for the individual to qualify for the subsidy. The reduction in hours (Qualifying Event) does not have to have been involuntary.
• Persons whose employment was terminated for gross misconduct are not eligible for the subsidy.
• Assistance Eligible Individuals (AEIs) who have individual coverage, either obtained through a health insurance marketplace or Medicaid, are eligible for subsidized coverage. However, those who elect to enroll in COBRA continuation coverage with premium assistance will no longer be eligible for a premium tax credit, advance payments of the premium tax credit, or the health insurance tax credit for their health coverage during that period.
• The amount of the subsidy includes any administrative fees associated with the COBRA premium.
• AEIs that misrepresent their eligibility for other coverages may be subject to fines, the greater of $250 or 110% of the premium subsidy.

There is likely to be additional guidance in the coming weeks, as the DOL, the Internal Revenue Service (IRS) and the U.S. Department of Health and Human Services (HHS) answer more questions related to the mechanics of reimbursement for the subsidy and other questions. We will continue to update clients as more information becomes available.

The complete FAQ guidance, model notices, and other information can be found at https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra/premium-subsidy.

Keenan & Associates is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.