The COBRA subsidies created under the American Rescue Plan Act of 2021 (ARPA) are going to end soon. This may mean that things will soon be getting back to normal for COBRA administrators. However, there are still several complications and compliance issues to tackle, and the transition may be a confusing one.

Premium Subsidies Basics

Section 9501 of the ARPA created temporary premium assistance for eligible COBRA recipients.

  • Individuals may be eligible if they are being offered COBRA because of a reduction in hours or involuntary termination.
  • The subsidies can apply to COBRA coverage required under both federal and state mini-COBRA laws.
  • The assistance subsidizes COBRA premiums at 100%, and employers and plans that receive COBRA premium payments are entitled to a tax credit in the amount of the premium assistance.
  • This assistance applies between April 1, 2021 and September 30, 2021.
  • Some people who were eligible for COBRA may have rejected or discontinued coverage due to the cost. In an FAQ, the DOL says these individuals may be entitled to another election opportunity if their coverage would not have expired when the premium subsidies began.

A few months ago, the challenge lay in figuring out how to implement the subsidies and provide the required notices. Now that the subsidy period is ending, new challenges lay ahead.

New Notices Are Needed

It’s easy to see how the end of the premium assistance subsidy could go badly. Although the subsidies are ending, many people are still eligible for COBRA continuation coverage. This means that their coverage will continue, but they will suddenly be responsible for the premium payments. This could catch some people off guard. They may not be able to make the payments, and this could lead to coverage issues for them.

In this situation, Medicaid or Marketplace coverage may provide more affordable coverage solutions. Communication about the end of premium subsidies, as well as other options for coverage, is essential.

The DOL has issued a Model Notice of Expiration of Period Premium Assistance. This notice provides important information about the end of premium subsidies and enrollment in other health coverage plans. Some COBRA recipients may elect to keep their COBRA coverage after the premium subsidies end, but they need this information to make an informed decision. Although COBRA administrators are not required to use the model notice, using it is considered to be good faith compliance with the requirements for providing notice of the expiration of the period of ARPA premium assistance.

This notice should be sent to Assistance Eligible Individuals 15 to 45 days before their premium assistance expires. For some individuals, the premium assistance may end early because they become eligible for Medicare or another group health plan, or because their COBRA coverage period ends. However, in many cases, the assistance will end when the ARPA provision expires. With the ARPA subsidies set to expire on September 30, many people should receive this notice sometime between the second half of August and the first half of September.

An Easy Solution

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