DOL Issues ARPA Model Notices and FAQs

DOL Issues ARPA Model Notices and FAQs

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 applies to all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules. (Please note Q2 of the FAQs).
  • 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.  (Please note Q3 and Q5 of the FAQs).
  • Persons whose employment was terminated for gross misconduct are not eligible for the subsidy. (Please note Q3 the FAQs.  And, following prior precedent under ARRA–Gross Misconduct is generally reserved for crimes (arrests/referred for prosecution, etc.) not for mere violations of an employee handbook, insubordination, etc.).
  • The DOL noted that any time period or program requirements for state continuation programs will not be affected by the ARPA guidance. (Please note Q6 of the FAQs).
  • 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. (Please note Q18 of the FAQs).
  • The amount of the subsidy includes any administrative fees associated with the COBRA premium.  (Please note Q8 and Q9 of the FAQs).
  • The DOL provided further guidance regarding the model notice requirements and included examples. We have linked to those below. (Please note Q10, Q11, and Q12 of the FAQs).
  • AEIs that misrepresent their eligibility for other coverages may be subject to fines, the greater of $250 or 110% of the premium subsidy.

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.

Please contact your Account Executives for additional information.

Links