The American Rescue Plan Act (ARPA) provides COBRA premium assistance to eligible individuals and imposes notice requirements on health plans. One such requirement is that plans must notify eligible individuals about when their premium assistance ends, and whether they may be eligible for regular COBRA coverage or coverage under another group health plan.

Background

The ARPA requires the full cost of COBRA premiums from April 1, 2021, through Sept. 30, 2021, to be subsidized for certain assistance-eligible individuals whose work hours were reduced or whose employment was involuntarily terminated. The subsidies are reimbursed directly to the employer, plan administrator, or insurance company (as applicable) through a COBRA subsidy tax credit.

Notice of Subsidy Expiration

The notice of premium subsidy expiration must be provided during the 45 – 15-day period before an individual’s subsidy expires. This means that, for individuals whose subsidy is expiring due to the end of the subsidy period, the notice must generally be provided from Aug. 16, 2021, to Sept. 15, 2021. Otherwise, the due date will depend on when an individual’s maximum COBRA coverage period ends.
Plans are not required to issue an expiration notice to individuals whose subsidy is expiring because they became eligible for other group health plan coverage or Medicare.

Model Notice Available

The U.S. Department of Labor (DOL) has issued a model notice of expiration of premium assistance (Word / PDF) that can be used to satisfy this requirement. The model is also available in Spanish (Word / PDF).

Notice Content Requirements

The notice of premium subsidy expiration must be written in clear and understandable language, and inform recipients that:

• The premium assistance will expire soon, prominently identifying the expiration date; and
• The individual may be eligible for coverage without premium assistance through regular COBRA coverage or coverage under a group health plan.

ADDITIONAL INFORMATION

For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949‐833‐2983 or inquiries@burnhambenefits.com.

Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.