DOL Issues Guidance, Including Model Documents, for Implementing ARPA’s COBRA Subsidy

By Samuel Gates, Peter Moser   April 12, 2021

 

As discussed in our recent client alert on the new COBRA subsidy, a provision of the American Rescue Plan Act (ARPA) requires employers to pay COBRA premiums for eligible employees who lost group health coverage due to reduced hours or involuntary termination and employers will receive a reimbursement in the form of a tax credit on their quarterly tax payment. This subsidy is available for 6 months, from April 1, 2021 to September 30, 2021, but does not extend the normal 18-month period for COBRA coverage. Given the administrative challenges the ARPA COBRA subsidy presents to employers, on April 7, 2021 the Department of Labor (DOL) issued guidance and model notices for implementing the provision’s requirements.

Specifically, the model notices issued by the DOL are designed to help employers comply with the notice requirements of the ARPA and communicate with employees in three categories: (1) newly eligible individuals; (2) previously eligible individuals who elected not to enroll or are no longer enrolled; or (3) individuals whose coverage is set to expire.

The DOL guidance also includes a “Frequently Asked Questions” document to help employers interpret the new law. All documents included in the April 7th guidance were created by the DOL in consultation with the Departments of the Treasury and Health and Human Services.

Additional Guidance for Employers

More guidance on how employers can apply to be reimbursed for premium payments is expected from federal agencies in the coming weeks. Be sure to check HRW Alerts and News for updates, or reach out to any member of the HRW Team. Our original client alert and all guidance issued by the Department of Labor can be found by visiting the links below:

For Questions/Compliance Assistance

If you have any questions about the COBRA subsidy, the new guidance, or the potential impact on your business or organization, please contact:

  • Sam Gates (sgates@hrwlawyers.com / 617-348-4346);
  • Pete Moser (pmoser@hrwlawyers.com / 617-348-4323); or
  • Any member of the HRW Team to discuss your particular situation.

Click here to download this alert as a PDF. 

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