American Rescue Plan Act: DOL COBRA Premium Subsidy Updates

On May 17, 2021 the Department of Labor hosted a WebEx Presentation on the ARPA COBRA Premium Subsidy. At the end of the Presentation two Senior Benefits Advisors held a Question & Answer session resulting in the following clarifications.

• Notice must only be provided to employees who experience a Reduction of Hours or who are Involuntarily Terminated
• Involuntary Termination includes:
  • Retirement if the employer would have terminated the employee absent retirement and the employee had knowledge of it.
  • An employee election of a severance agreement if the employer would have terminated the employee absent voluntary severance and the employee had knowledge of it.
• Involuntary Termination excludes:
  • Voluntary notice from an employee to the employer that they will not be returning to employment at the end of their FMLA leave.
  • Failure to renew an employee contract upon expiration.
• If an employee had a Reduction in Hours or was Involuntarily Terminated:
  • The COBRA Premium Subsidy is available if the original 18-month COBRA period was extended to 29 months due to a Qualified Beneficiary’s disability.
  • The COBRA Premium Subsidy is available if the original 18-month COBRA period was extended to 36 months because of a dependent Qualified Beneficiary’s second Qualifying Event.
• Dependents enrolled in COBRA between April 1st and September 30th as the result of a special enrollment event (for example, the enrollment of a newborn or adopted child) are not eligible for the COBRA Premium Subsidy.
• COBRA Premium Subsidy eligible individuals in an ERISA plan can, but are not required to, retroactively self-pay the COBRA premium for months prior to April 1, 2021 in which they were eligible, but not enrolled in, COBRA.