The American Rescue Plan Act of 2021 (“ARPA”) provides a premium subsidy for continuing coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for employees who lost their health insurance coverage as a result of an involuntary termination (other than gross misconduct) or a reduction of hours, known as Assistance Eligible Individuals (“AEIs”). This COBRA premium subsidy generally is available between April 1, 2021, and September 30, 2021, unless it ends earlier for AEIs who become entitled to other group health coverage or Medicare.

ARPA also requires employers to notify AEIs that their subsidy is ending soon, the date of the expiration, and that the individual may be eligible for coverage without any premium assistance through COBRA continuation coverage or other coverage options such as another group health plan, Medicaid, or Marketplace coverage. This notice must be sent at least 15 but no more than 45 days prior to the date that the subsidy will expire, which for many AEIs will be September 30, 2021. Accordingly, employers should be ready to notify these AEIs that their subsidy will be ending no later than September 15, 2021. Employers who fail to provide notice of the expiring COBRA coverage could be subject to penalties under the ARPA.

The U.S. Department of Labor has provided model notices to assist employers.

If you have any further questions about the notice requirements under the ARPA or any of the information from this alert, please contact Amy Christen ([email protected] or 248-203-0760), Dan Stern ([email protected] or 210-554-5591), or your Dykema relationship attorney.