New DOL Guidance for COBRA Premium Assistance Under ARPA
On April 7, 2021, the Department of Labor (DOL) created a new webpage to provide guidance related to an employer’s obligations to comply with the mandated COBRA premium assistance under The American Rescue Plan Act of 2021’s (ARPA).
Now, ARPA requires employers to advance premiums for temporary COBRA coverage for “Assistance Eligible Individuals” (AEI). An AEI qualifies if their employment was terminated or hours reduced to trigger COBRA. AEIs terminated in the 18 months prior to April 1, 2021 will be eligible even if they did not previously elect COBRA coverage or if they elected COBRA coverage but discontinued it. The premium assistance is available from April 1, 2021 through September 30, 2021 and means that the premium will be paid by the employer (or the plan) and reimbursed to the employer through a credit against payroll taxes.
In addition, employers must give notice of the COBRA Premium Assistance. The DOL has created model notices that may be a starting point for employers or plans. The DOL’s FAQs For Employers may also be helpful.
Nonetheless, employers should confer with their counsel on how best to comply with The American Rescue Plan Act of 2021 and with their accountants to ensure proper tax credits.