As we blogged about here, the American Rescue Plan Act (ARPA), signed into law on March 11, 2021, includes several provisions impacting employers, their benefits plans, and Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requirements. 
Today, April 7, 2021, the U.S. Department of Labor (DOL) published highly anticipated FAQs About COBRA Premium Assistance Under the American Rescue Plan Act of 2021 and Model Notices
Below are 4 key takeaways for employers:
    1. The ARPA requires employers to provide 100% subsidized COBRA continuation coverage between April 1 and September 30, 2021 (the “Subsidy Period”) to qualified employees (and family members) who qualify for COBRA due to an involuntary termination or reduction in hours and elect coverage. 
   2. Significantly, the ARPA allows individuals whose COBRA election period expired prior to April 1, 2021, to elect subsidized COBRA overage beginning April 1, 2021, so long as the individual otherwise qualifies and remains eligible for COBRA coverage during some or all of the Subsidy Period. This is retroactive back to November 2019Depending upon the employer location, if it is state continuation vs. COBRA, then the retroactive period may be greater than 18 months.
   3. Further, employers must provide three types of notices to eligible individuals: 1) a COBRA General Election Notice, 2) a Special Election Notice (for those who previously elected but discontinued coverage or declined coverage), and 3) Expiration of Subsidy Notice. The DOL has now published these notices on its website. 
  4. Similar to the FFCRA, the federal government will reimburse employers dollar for dollar against their quarterly payroll tax obligations. If the tax credit exceeds the payroll taxes owed, it will be treated as an overpayment and refunded to the employer. Employers can also seek the advancement of the credit (to be treated as a refund) if the costs of subsidized coverage are expected to exceed the quarterly payroll taxes. Further guidance from the IRS is anticipated.
There are many nuances (and other technical requirements) associated with these requirements that necessitate quick action from employers (and their group health plans and COBRA administrators) to comply. Do you have questions about the new COBRA subsidy requirements? Don’t worry—we are here to help!
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