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Model COBRA Notices Under the American Rescue Plan Act

This client alert supplements our previous client alert discussing the premium assistance provided by the American Rescue Plan Act (the “Act”) for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) which can be found here. The Act required model notices to be published within 30 days of its enactment and the Department of Labor (“DOL”) published the required model notices on April 8, 2021. This client alert provides a more detailed overview of the notice requirements of the Act and provides information about the DOL model notices.

I. Overview of Eligibility for Premium Assistance and Notice Requirements

As a brief summary, only individuals who became eligible for COBRA coverage due to a reduction in hours or an involuntary termination are assistance eligible individuals (“AEIs”) and are eligible to receive the premium assistance provided by the Act. The Act requires certain notices to be provided to inform individuals about the premium assistance as discussed in more detail below, and failure to provide the notices timely will generally be considered a failure to provide COBRA notices as required by law.

II. General Notice of Availability of Premium Assistance

a. What Information Is Required in the General Notice?

The Act requires general notice of the availability of COBRA premium assistance be provided (the “General Notice”) as discussed more thoroughly below. Specifically, the Act requires the following information be provided in the General Notice:

  1. the forms necessary for establishing eligibility for premium assistance,
  2. the name, address, and telephone number for the plan administrator (or other person that maintains relevant information, such as a COBRA administrator),
  3. a description of the extended election period,
  4. a description of the AEI’s obligation to notify the group health plan once the AEI ceases to meet the requirements for premium assistance,
  5. a description of the AEI’s right to premium assistance and any conditions on entitlement to the premium assistance, and
  6. a description of the option of the AEI to enroll in different coverage if the employer is allowing employees to elect to enroll in different coverage.

For AEIs enrolled in COBRA coverage prior to April 1, 2021, only the additional information required by the General Notice must be provided. For individuals who become AEIs during the period beginning April 1, 2021 through September 30, 2021 (the “Premium Assistance Period”), the existing required information for COBRA election notices must be provided along with the additional information required by the General Notice.

b. To Whom Must the General Notice Be Provided?

AEIs who elected COBRA coverage prior to the beginning of the Premium Assistance Period must be provided the General Notice. The Act also requires that all qualified beneficiaries who experience a qualifying event during the Premium Assistance Period be provided the General Notice, including qualified beneficiaries who are not AEIs due to their qualifying event being an event other than a reduction in hours or involuntary termination.

c. In What Form Must the General Notice Be Provided?

The General Notice may be provided separately from the COBRA election notice or along with such notice and can be done either by modifying existing COBRA notices or by using the model notices published by the DOL. For qualified beneficiaries that experience a qualifying event during the Premium Assistance Period, the General Notice information requirements and the COBRA election notice requirements can be met by filling in the applicable information and furnishing the DOL model notice found here and providing the summary of the COBRA premium assistance published by the DOL located here (the “COBRA Premium Assistance Summary”) along with the notice. For AEIs who are already enrolled in COBRA coverage prior to April 1, 2021, the DOL model notice found here (along with the COBRA Premium Assistance Summary) can be used to meet the General Notice requirements.

The DOL has also published an alternative model notice which can be utilized by insured group health plans subject to state continuation coverage requirements (and presumably other group health plans not subject to COBRA that are subject to state continuation requirements), which can be found here. When the required information is filled in, this alternative model notice (along with the COBRA Premium Assistance Summary) will satisfy the General Notice requirements under the Act.

d. When Must the General Notice Be Provided?

AEIs who are already enrolled in COBRA continuation coverage must be provided with the additional information required in the General Notice no later than May 31, 2021 (60 days from April 1, 2021). Individuals who experience a qualifying event after April 1, 2021 must be provided the COBRA election notice and the General Notice in accordance with the existing COBRA requirements. The Act does not modify any of the requirements or time periods for electing continuation coverage under state continuation coverage programs, so group health plans not subject to COBRA should adhere to the requirements of such programs.

III. Extended Election Period Notice

a. What Information Is Required in the Extended Election Period Notice?

Under the Act, certain individuals (as discussed below) are eligible to elect COBRA continuation coverage retroactively effective beginning April 1, 2021. Individuals who are eligible to make an election for COBRA continuation coverage during the extended election period must be provided notice informing them of such eligibility and the information required in the General Notice (the “Extended Election Period Notice”).

b. To Whom Must the Extended Election Period Notice Be Provided?

Extended Election Period Notices must be provided to all individuals who would be AEIs if they had made a COBRA election and individuals who had previously elected COBRA coverage due to either a reduction in hours or an involuntary termination and discontinued COBRA coverage prior to April 1, 2021. This means that any individual who had his or her hours reduced or was involuntarily terminated as far back as October of 2019 may need to be provided an Extended Election Period Notice. If an eligible individual timely makes the election, coverage will be retroactive to April 1, 2021 and he or she will receive the premium assistance through the earlier of September 30, 2021 or the date his or her maximum COBRA continuation coverage period expires.

c. In What Form Must the Extended Election Period Notice Be Provided?

The Extended Election Period Notice may be provided by modifying existing COBRA notices to meet the requirements or filling in the applicable information and furnishing the DOL model notice located here along with the COBRA Premium Assistance Summary.

d. When Must the Extended Election Period Notice Be Provided?

The Extended Election Period Notice must be provided to the individuals identified above no later than May 31, 2021 (60 days from April 1, 2021). The individuals to whom the notice is provided will have 60 days from the date it is provided to make the COBRA continuation coverage election.

IV. Notice of Premium Assistance Expiration Notice

a. What Information is Required in the Premium Assistance Expiration Notice?

The Act requires group health plans to notify AEIs when their premium assistance is going to expire soon. The required notice (the “Premium Assistance Expiration Notice”) must inform AEIs that that (i) the premium assistance will expire soon (and must prominently indicate the date of expiration) and (ii) the individual may be eligible for coverage without any premium assistance through COBRA continuation coverage or coverage under a group health plan.

b. To Whom Must the Premium Assistance Expiration Notice Be Provided?

The Premium Assistance Expiration Notice must generally be provided to AEIs receiving premium assistance under the Act prior to the expiration of such assistance. However, the notice is not required to be provided to AEIs that lose eligibility for premium assistance due to becoming eligible under another group health plan (other than a group plan that only provides excepted benefits, a qualified small employer health reimbursement arrangement, or a health flexible spending arrangement), including Medicare. The AEI is required to notify the group health plan when he or she becomes eligible under another group health plan and failure to do so can result in penalties for the AEI.

c. In What Form Must the Premium Assistance Expiration Notice Be Provided?

The Premium Assistance Expiration Notice may be provided by filling in the applicable information and furnishing the DOL model notice located here. The Act does not specifically state that the Premium Assistance Expiration Notice may be provided in another manner.

d. When Must the Premium Assistance Expiration Notice Be Provided?

The Premium Assistance Expiration notice must be provided to AEIs receiving premium assistance no earlier than 45 days and no later than 15 days prior to the end of the AEI’s premium assistance. For AEIs whose maximum period of COBRA coverage does not expire prior to September 30, 2021, the notice must be provided between August 16, 2021 and September 15, 2021.

Lewis Rice pension & employee benefits attorneys are knowledgeable in all aspects of employee benefits matters. If you have questions about notice requirements related to the American Rescue Plan Act of 2021 or the DOL model notices, please contact an author listed above.

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