With the American Rescue Plan Act (ARPA) COBRA subsidy coming to end on September 30, 2021, questions are arising as to the plan administrators next steps. Below you will find some of the more common FAQs:
Subsidy Expiration Notification
To ensure compliance, plan administrators must provide a timely notice to those AEIs who wish to maintain their COBRA continuation coverage after the subsidy has ended. The subsidy Expiration Notice must only be provided to AEIs who are eligible to continue COBRA beyond the coverage period ending September 30, 2021. Plan administrators must notify AEIs at least 15 days (but no more than 45 days) before they will lose the subsidy. The notice must explain in “clear and understandable language” when the AEI’s subsidy will expire by indicating the expiration date in a prominent way.
Who needs to receive this notice?
The subsidy expiration notice only has to be given to Assistance Eligible Individuals (AEIs) who will lose the subsidy due to the first of two events: either the end of (a) the COBRA subsidy period (September 30, 2021) or (b) the end of their continuation coverage period. Plan administrators are not required to provide the Expiration Notice to any individual who voluntarily drops COBRA coverage, enrolls in other group health plan coverage or Medicare, or whose maximum COBRA coverage period ends before September 30, 2021.
Diversified Response: For our COBRA clients, Diversified Group has been sending this notice to AEIs at the end of their COBRA continuation period and will be sending these notices out on your behalf to those who will lose their subsidy on September 30th. We will be using the DOL’s model expiration notice which can be found HERE.
What happens when the COBRA subsidy ends in September?
- Qualified beneficiaries can continue on unsubsidized COBRA coverage until their 18 months of COBRA eligibility ends.
- Loss of the COBRA subsidy is NOT a qualifying event under HIPAA special enrollment or Section 125 for most group health plans. Technically, an employee or dependent that was eligible for group coverage was not eligible for the subsidy and was required to attest to not having other group coverage available in order to obtain the subsidy. However, in the event you are presented with an employee or dependent that has waived off your group coverage in favor of subsidized COBRA, they do not have an enrollment right to come onto your plan when the subsidy ends unless it coincides with the ending of COBRA itself. These employees could remain on COBRA, unsubsidized, and would be able to enroll in the group plan at either the end of their COBRA eligibility period or your plan’s next open enrollment period.
- However, they DO have the option to enroll in marketplace coverage within 60 days of when the subsidy ends in September. Loss of the COBRA subsidy will make someone eligible for special enrollment for marketplace coverage. This may be worth exploring to determine if the marketplace coverage is more economical than unsubsidized COBRA.
Reach out to your Diversified Account team with any questions.