There are 21 FAQs in the DOL’s guidance released on April 7, 2021 providing clarification on the COBRA subsidy added by the American Recue Plan Act of 2021 (ARPA). Generally, when we think of COBRA, the focus is on federal COBRA laws, that are typically applicable to private sector employers subject to ERISA with twenty or more employees and governmental plans. State continuation, or ‘mini-COBRA” laws have been adopted by over 40 states and often fill in gaps where the Federal COBRA laws do not apply or extends coverage after Federal COBRA has been exhausted.
The COBRA subsidies under ARPA are also available to Assistance Eligible Individuals (AEIs*) enrolled in a state continuation program; however, ARPA does not change any state program requirements or time periods for election of state continuation. This means there are important differences on how the subsidies work for health plans only subject to state continuation (e.g., church plans or employer plans when the employer has less than 20 employees).
- It does not add a Notice requirement for States if the State does not have a notice requirement now. The general notice, second election notice and subsidy expiration notice requirements are only applicable to federal COBRA plans. The DOL did provide a model alternative notice to satisfy mini-COBRA subsidy notice requirements.
- If the state’s mini-COBRA laws do not provide continuation coverage due to a reduction in hours, an AEI is not eligible for a subsidy if they lost coverage because their hours were reduced.
- Individuals must elect to receive state continuation within the state’s required original election time period, unless the state issues guidance permitting a second election period. The section of ARPA that provides for the second election period references ERISA, the Internal Revenue Code, and the Public Health Service Act—but does not explicitly address state law programs.
*AEIs are those whose involuntary termination or reduction in hours occurred:
- During the subsidy period (4/1/2021 – 9/30/2021)
- Prior to the subsidy period but they have existing COBRA coverage extending into the subsidy period
- Prior to the subsidy period and have not elected COBRA. But if they had elected, coverage would have extended into the subsidy period.
- Includes those who elected and subsequently dropped COBRA coverage before the subsidy period begins.
If you have any questions regarding the COBRA subsidy guidance, contact: firstname.lastname@example.org
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