The U.S Department of Labor (DOL) recently released Frequently Asked Questions (FAQ) and model notices to provide guidance in the implementation and COBRA subsidy provisions within the American Rescue Plan Act (ARPA). The ARPA FAQs address a number of questions and concerns that employers have had since the Act was signed into law.
Who does the subsidy apply to?
The subsidies under ARPA apply to individuals that have lost coverage due to either a reduction in hours or an involuntary termination. The reduction in hours is referred to as a Qualifying Event (QE) and does not have to have been involuntary in order to qualify. Individuals whose employment was terminated for gross misconduct are not eligible for the subsidy. The Department of Labor has noted that any time period or program requirements for state continuation programs will not be affected by the ARPA guidance.
Additionally, under the ARPA FAQs, Assistance Eligible Individuals (AEIs) who have individual coverage are eligible for subsidized coverage. This is true whether that coverage was obtained through Medicaid or the health insurance marketplace. Those that elect to enroll in COBRA continuation coverage will no longer be eligible for a premium tax credit, or the advance payments and health insurance tax credit during their coverage period. The amount of the subsidy includes any administrative fees associated with the COBRA premium. AEIs that misrepresent their eligibility for other coverages may be subject to fines, the great of $250 or 110 percent of the premium subsidy.
Read more about preparing for COBRA subsidies — click here.
Resources for ARPA FAQs
The Department of Labor has provided several resources for employers, along with the complete ARPA FAQs and model notices, on their website. Please see our list below, for quick reference:
Overview of the COBRA Premium Subsidy: www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra/premium-subsidy
Summary of COBRA Premium Assistance Provisions: https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/cobra/premium-subsidy/summary-of-provisions.pdf
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