Under the American Rescue Plan Act (ARPA), a COBRA qualified beneficiary who becomes eligible for COBRA due to a reduction in hours or involuntary termination of employment may be eligible for a COBRA subsidy equal to the entire COBRA premium for the period from April 1, 2021 through September 30, 2021. That subsidy period is now nearing its end.
Employers and plan administrators are required to provide subsidy termination notices to beneficiaries before their COBRA subsidy ends, sending the subsidy termination notices no more than 45 days and no less than 15 days before the date that the COBRA subsidy will end for the individual. For many beneficiaries, this means that these notices must be sent between August 16 and September 15 to reflect the end of the COBRA subsidy period on September 30.
The subsidy termination notices must include the following information:
- A statement that the COBRA subsidy will end soon and "prominent identification" of the date that it will end.
- A statement that the person may be eligible for coverage without a COBRA subsidy through COBRA or another group health plan.
The notice is not required if the COBRA subsidy is terminated due to eligibility for another group health plan or Medicare.
A model subsidy termination notice can be found on the Department of Labor (DOL) website. Use of the model notice is not required, but the DOL considers its use as good faith compliance with the notice requirements under ARPA.
In case Congress extends the subsidy period, employers may want to delay until closer to the September 15 deadline before sending the subsidy termination notice to persons who will lose the subsidy on September 30. At this point, however, there is no news of a planned extension of the subsidy period.
John Falcone and Luke Malloy handle employment law matters at PLDR Law. Feel free to contact us if you have questions about this matter.