American Rescue Plan Act of 2021 COBRA FAQ


FAQS ABOUT COBRA PREMIUM ASSISTANCE UNDER THE AMERICAN RESCUE PLAN ACT OF 2021

April 07, 2021

Set out below are Frequently Asked Questions (FAQs) regarding implementation of certain
provisions of the American Rescue Plan Act of 2021 (ARP), as it applies to the Consolidated
Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. These FAQs have been
prepared by the Department of Labor (DOL). Like previously issued FAQs (available at
https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs), these FAQs
answer questions from stakeholders to help individuals understand the law and benefit from it, as
intended. The Department of the Treasury and the Internal Revenue Service (IRS) have reviewed
these FAQs, and, concur in the application of the laws under their jurisdiction as set forth in
these FAQs.

COBRA Continuation Coverage
COBRA continuation coverage provides certain group health plan continuation coverage rights
for participants and beneficiaries covered by a group health plan. In general, under COBRA, an
individual who was covered by a group health plan on the day before the occurrence of a
qualifying event (such as a termination of employment or a reduction in hours that causes loss of
coverage under the plan) may be able to elect COBRA continuation coverage upon that
qualifying event.

ARP COBRA Premium Assistance
Section 9501 of the ARP provides for COBRA premium assistance to help Assistance Eligible
Individuals (as defined below in Q3) continue their health benefits. The premium assistance is
also available for continuation coverage under certain State laws. Assistance Eligible Individuals
are not required to pay their COBRA continuation coverage premiums. The premium assistance
applies to periods of health coverage on or after April 1, 2021 through September 30, 2021. An
employer or plan to whom COBRA premiums are payable is entitled to a tax credit for the
amount of the premium assistance

General Information
Ql: I have heard that the ARP included temporary COBRA premium assistance to pay for
health coverage. I would like more information.

A:  The ARP provides temporary premium assistance for COBRA continuation coverage for
Assistance Eligible Individuals (see Q3 to determine if you are eligible). COBRA allows certain
people to extend employment-based group health plan coverage, if they would otherwise lose the
coverage due to certain life events such as loss of a job.

Individuals may be eligible for premium assistance if they are eligible for and elect COBRA
continuation coverage because of then own or a family member’s reduction in hours or an
involuntary termination from employment. This premium assistance is available for periods of
coverage from April 1, 2021 through September 30, 2021. This premium assistance is generally
available for continuation coverage under the Federal COBRA provisions, as well as for group
health insurance coverage under comparable state continuation coverage (“ mini-COBRA” ) laws.
If you were offered Federal COBRA continuation coverage as a result of a reduction in hours or
an involuntary termination of employment, and you declined to take COBRA continuation
coverage at that time, or you elected Federal COBRA continuation coverage and later
discontinued it, you may have another opportunity to elect COBRA continuation coverage and
receive the premium assistance, if the maximum period you would have been eligible for
COBRA continuation coverage has not yet expired (if COBRA continuation coverage had been
elected or not discontinued).

Q2:  Which plans does the premium assistance apply to?

A:  The COBRA premium assistance provisions apply to all group health plans sponsored by
private-sector employers or employee organizations (unions) subject to the COBRA rules under
the Employee Retirement Income Security Act of 1974 (ERISA). They also apply to plans
sponsored by State or local governments subject to the continuation provisions under the Public
Health Service Act. The premium assistance is also available for group health insurance required
under state mini-COBRA laws.

Q3: How can I tell if I am eligible to receive the COBRA premium assistance?

A:  The ARP makes the premium assistance available for “ Assistance Eligible Individuals.” An
Assistance Eligible Individual is a COBRA qualified beneficiary who meets the following
requirements during the period from April 1, 2021 through September 30, 2021:
Is eligible for COBRA continuation coverage by reason of a qualifying event that is a
reduction in hours (such as reduced hours due to change in a business’s hours of
operations, a change from lull-time to part-time status, taking of a temporary leave of
absence, or an individual’s participation in a lawful labor strike, as long as the
individual remains an employee at the time that hours are reduced) or an involuntary
termination of employment (not including a voluntary termination); and
Elects COBRA continuation coverage.

However, you are not eligible for the premium assistance if you are eligible for other group
health coverage, such as through a new employer’s plan or a spouse’s plan (not including
excepted benefits, a qualified small employer health reimbursement arrangement (QSEHRA), or
a health flexible spending arrangement (FSA)), or if you are eligible for Medicare.

Note that if you have individual health insurance coverage, like a plan through the Health Insurance
Marketplace®, or if you have Medicaid, you may be eligible for ARP premium assistance.
However, if you elect to enroll in COBRA continuation coverage with premium assistance, you
will no longer be eligible for a premium tax credit, advance payments of the premium tax credit,
or the health insurance tax credit for your health coverage during that period.

Note: If the employee’s termination of employment was for gross misconduct, the employee and
any dependents would not qualify for COBRA continuation coverage or the premium assistance.

Q4: If I am eligible for the premium assistance, how long will it last?

A:  Your premium assistance can last from April 1, 2021 through September 30, 2021. However, it
will end earlier if:

  • You become eligible for another group health plan, such as a plan sponsored by a new
    employer or a spouse’s employer (not including excepted benefits, a QSEHRA, or a
    health FSA), or you become eligible for Medicare*, or
  • You reach the end of your maximum COBRA continuation coverage period.

If you continue your COBRA continuation coverage after the premium assistance period, you
may have to pay the full amount of the premium otherwise due. Failure to do so may result in
your loss of COBRA continuation coverage. Contact your plan administrator, employer
sponsoring the plan, or health insurance issuer for more information.

When your COBRA premium assistance ends, you may be eligible for Medicaid or a special
enrollment period to enroll in coverage through the Health Insurance Marketplace® or to enroll
in individual market health insurance coverage outside of the Marketplace. A special enrollment
period is also available when you reach the end of your maximum COBRA coverage period. You
may apply for and, if eligible, enroll in Medicaid coverage at any time. For more information, go
to: https://www.healthcare.gov/medicaid-chip/getting-medicaid-chip/.

*Individuals receiving the COBRA premium assistance must notify their plans if they become
eligible for coverage under another group health plan (not including excepted benefits, a
QSEHRA, or a health FSA), or for Medicare. Failure to do so can result in a tax penalty.

Q5: Who is eligible for an additional election opportunity for COBRA continuation
coverage?

A:  A qualified beneficiary whose qualifying event was a reduction in hours or an involuntary
termination of employment prior to April 1, 2021 and who did not elect COBRA continuation
coverage when it was first offered prior to that date or who elected COBRA continuation
coverage but is no longer enrolled (for example, an individual who dropped COBRA
continuation coverage because he or she was unable to continue paying the premium) may have
an additional election opportunity at this time. Individuals eligible for this additional COBRA
election period must receive a notice of extended COBRA election period informing them of this
opportunity. This notice must be provided within 60 days of the first day of the first month
beginning after the date of the enactment of the ARP (so, by May 31, 2021) and individuals have
60 days after the notice is provided to elect COBRA. However, this additional election period
does not extend the period of COBRA continuation coverage beyond the original maximum
period (generally 18 months from the employee’s reduction in hours or involuntary termination).
COBRA continuation coverage with premium assistance elected in this additional election period
begins with the first period of coverage beginning on or after April 1, 2021. Individuals can
begin their coverage prospectively from the date of their election, or, if an individual has a
qualifying event on or before April 1st, choose to start then coverage as of April 1st, even if the
individual receives an election notice and makes such election at a later date. In either case,
please note that the premium assistance is only available for periods of coverage from April 1,
2021 through September 30,2021.

Due to the COVID-19 National Emergency, the DOL, the Department of the Treasury, and the
IRS issued a Notice of Extension of Certain Timeframes for Employee Benefit Plans,
Participants, and Beneficiaries Affected by the COVID-19 Outbreak (“ Joint Notice” ). This
notice provided relief for certain actions related to employee benefit plans required or permitted
under Title I of ERISA and the Code, including the 60-day initial election period for COBRA
continuation coverage. The DOL’s Employee Benefits Security Administration (EBSA) provided
further guidance on this relief in EBSA Disaster Relief Notice 2021-01.4 This extended deadline
relief provided in the Joint Notice and Notice 2021-01 does not apply, however, to the 60-day
notice or election periods related to COBRA premium assistance under the ARP.

Q6: Does the ARP change any State program requirements or time periods for election of
continuation coverage?

A:  No. The ARP does not change any requirement of a State continuation coverage program. The
ARP only allows Assistance Eligible Individuals who elect continuation coverage under State
insurance law to receive premium assistance from April 1, 2021 through September 30, 2021. It
also allows Assistance Eligible Individuals to switch to other coverage offered to similarly
situated active employees if the plan allows it, provided that the new coverage is no more
expensive than the prior coverage. See Q15 and Q17 for more information.

Premiums
Q7: How do I apply for the premium assistance?

A:  If you were covered by an employment-based group health plan on the last day of your
employment or a family member’s employment (or the last day before your or your family
member’s reduction in hours causing a loss of coverage), the plan or issuer should provide you
and your beneficiaries with a notice of your eligibility to elect COBRA continuation coverage
and to receive the premium assistance. The notice should include any forms necessary for
enrollment, including forms to indicate that you are an Assistance Eligible Individual and that
you are not eligible for another group health plan (this does not include excepted benefits, a
QSEHRA, or a health FSA), or eligible for Medicare.

If you believe you are (or may be, upon a COBRA election) an Assistance Eligible Individual
and have not received a notice from your employer, you may notify your employer of your
request for treatment as an Assistance Eligible Individual (for example, using the “ Request for
Treatment as an Assistance Eligible Individual Form” that is attached to the Summary of
COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021) for
periods of coverage starting April 1, 2021. If you are an Assistance Eligible Individual, the ARP
provides that you must be treated, for purposes of COBRA, as having paid in full the amount of
such premium from April 1, 2021 through September 30, 2021.5 Accordingly, plans and issuers
should not collect premium payments from Assistance Eligible Individuals and subsequently
require them to seek reimbursement of the premiums for periods of coverage beginning on or
after April 1, 2021, and preceding the date on which an employer sends an election notice, if an
individual has made an appropriate request for such treatment. You should contact your plan or
issuer directly to ask about taking advantage of the premium assistance.

Q8: How will the premium assistance be provided to me?

A:  You will not receive a payment of the premium assistance. Instead, Assistance Eligible
Individuals do not have to pay any of the COBRA premium for the period of coverage from
April 1, 2021 through September 30, 2021. The premium is reimbursed directly to the employer,
plan administrator, or insurance company through a COBRA premium assistance credit.

Q9: Am I required to pay any administrative fees?

A:  If you are an Assistance Eligible Individual, you will not need to pay any part of what you would
otherwise pay for your COBRA continuation coverage, including any administration fee that
would otherwise be charged.

Notices
Q10: Does the ARP impose any new notice requirements?

A: Yes, plans and issuers are required to notify qualified beneficiaries regarding the premium
assistance and other information about their rights under the ARP, as follows:

  • A general notice to all qualified beneficiaries who have a qualifying event that is a
    reduction in hours or an involuntary termination of employment from April 1, 2021
    through September 30, 2021. This notice may be provided separately or with the
    COBRA election notice following a COBRA qualifying event.
  • A notice of the extended COBRA election period to any Assistance Eligible
    Individual (or any individual who would be an Assistance Eligible Individual if a
    COBRA continuation coverage election were in effect) who had a qualifying event
    before April 1, 2021. This requirement does not include those individuals whose
    maximum COBRA continuation coverage period, if COBRA had been elected or not
    discontinued, would have ended before April 1, 2021 (generally, those with
    applicable qualifying events before October 1, 2019). This notice must be provided
    within 60 days following April 1, 2021 (that is, by May 31, 2021).

The ARP also requires that plans and issuers provide individuals with a notice of expiration of
periods of premium assistance explaining that the premium assistance for the individual will
expire soon, the date of the expiration, and that the individual may be eligible for coverage
without any premium assistance through COBRA continuation coverage or coverage under a
group health plan. Coverage may also be available through Medicaid or the Health Insurance
Marketplace®. This notice must be provided 15 – 45 days before the individual’s premium
assistance expires.

Unless specifically modified by the ARP, the existing requirements for the manner and timing of
COBRA notices continue to apply. Due to the COVID-19 National Emergency, DOL, the
Department of the Treasury, and the IRS issued guidance extending timeframes for certain
actions related to health coverage under private-sector employment-based group health plans.6
The extensions under the Joint Notice and EBSA Disaster Relief Notice 2021-01 do not apply,
however, to the notices or the election periods related to COBRA premium assistance available
under the ARP. Therefore, plans and issuers must provide the notices according to the
timeframes specified in the ARP (outlined above).

DOL is committed to ensuring that individuals receive the benefits to which they are entitled
under the ARP. Employers or multiemployer plans may also be subject to an excise tax under the
Internal Revenue Code for failing to satisfy the COBRA continuation coverage requirements.
This tax could be as much as $100 per qualified beneficiary, but not more than $200 per family,
for each day that the taxpayer is in violation of the COBRA rules.

Qll: What information must the notices include?

A:  The notices must include the following information:

  • The forms necessary for establishing eligibility for the premium assistance;
  • Contact information for the plan administrator or other person maintaining relevant
    information in connection with the premium assistance;
  • A description of the additional election period (if applicable to the individual);
  • A description of the requirement that the Assistance Eligible Individual notify the
    plan when he/she becomes eligible for coverage under another group health plan (not
    including excepted benefits, a QSEHRA, or a health FSA), or eligible for Medicare
    and the penalty for failing to do so;
  • A description of the right to receive the premium assistance and the conditions for
    entitlement; and
  • If offered by the employer, a description of the option to enroll in a different coverage
    option available under the plan.

Q12: Will there be model notices?

A:  Yes. DOL has developed model notices that are available at https://www.dol.gov/cobra-subsidy.

Individual Questions For Employees And Their Families
Q13: How much time do I have to enroll in COBRA continuation coverage?

A:  In general, individuals who are eligible for COBRA continuation coverage have 60 days after the
date that they initially receive their COBRA election notice to elect COBRA continuation
coverage. Due to the COVID-19 National Emergency, DOL, the Department of the Treasury,
and the IRS issued guidance extending timeframes for certain actions related to health coverage
under private-sector employment-based group health plans. The extensions under the the Joint
Notice and EBSA Disaster Relief Notice 2021-01 do not apply, however, to the notices or
elections related to COBRA premium assistance available under the ARP. Potential Assistance
Eligible Individuals therefore must elect COBRA continuation coverage within 60 days of
receipt of the relevant notice or forfeit theft right to elect COBRA continuation coverage with
premium assistance. Similarly, plans and issuers must provide the notices required under the
ARP within the timeframe required by the ARP.

Assistance Eligible Individuals do not need to send any payments for the COBRA continuation
coverage during the premium assistance period. For additional information about this guidance
visit: https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-adininistration-andcompliance/disaster-relief.

Q14: I am an Assistance Eligible Individual who has been enrolled in COBRA continuation
coverage since December 2020. Will I receive a refund of the premiums that I have already
paid?

A:  No. The COBRA premium assistance provisions in the ARP apply only to premiums for
coverage periods from April 1, 2021 through September 30, 2021. If you were eligible for
premium assistance, but paid in full for periods of COBRA continuation coverage beginning on
or after April 1, 2021 through September 30, 2021, you should contact the plan administrator.

Note, however, that a potential Assistance Eligible Individual has the choice of electing COBRA continuation
coverage beginning April I, 2021 or after (or beginning prospectively from the date of your qualifying event if your
qualifying event is after April 1, 2021), or electing COBRA continuation coverage commencing from an earlier
qualifying event if the individual is eligible to make that election, including under the extended time frames
provided under the Joint Notice and EBSA Notice 2021-01. The election period for COBRA continuation coverage
with premium assistance does not cut off the individual’s preexisting right to elect COBRA continuation coverage,
including under the extended time frames provided under the Joint Notice and EBSA Notice 2021-01. Note, that the
premium assistance is only available for periods from April 1, 2021 through September 30,2021.

Q15: I am currently enrolled in COBRA continuation coverage, but I would like to switch
to a different coverage option offered by the same employer. Can I do this?

A:  Group health plans can choose to allow qualified beneficiaries to enroll in coverage that is
different from the coverage they had at the time of the COBRA qualifying event. The ARP
provides that changing coverage will not cause an individual to be ineligible for the COBRA
premium assistance, provided that:

  • The COBRA premium charged for the different coverage is the same or lower than
    for the coverage the individual had at the time of the qualifying event;
  • The different coverage is also offered to similarly situated active employees; and
  • The different coverage is not limited to only excepted benefits, a QSEHRA, or a
    health FSA.

If the plan permits individuals to change coverage options, the plan must provide the individuals
with a notice of their opportunity to do so. Individuals have 90 days to elect to change their
coverage after the notice is provided.

Q16: Only part of my family elected COBRA continuation coverage but all of us were
eligible. Can I enroll the others and take advantage of the premium assistance?

A:  Each COBRA qualified beneficiary may independently elect COBRA continuation coverage. If a
family member did not elect COBRA continuation coverage when first eligible and that
individual would be an Assistance Eligible Individual, that individual has an additional
opportunity to enroll and qualify for the premium assistance. However, this extended election
period does not extend the maximum period of COBRA continuation coverage had COBRA
continuation coverage been originally elected. See Q3 and Q5 above for more information.

Q17: I received my COBRA election notice. Can I change my coverage option from the one
I had previously?

A:  In general, COBRA continuation coverage provides the same coverage that the individual had at
the time of the qualifying event. However, under the ARP, a plan may offer Assistance Eligible
Individuals the option of choosing other coverage that is also offered to similarly situated active
employees and that does not have higher premiums than the coverage the individual had at the
time of the qualifying event. See Q15 for more information.

Q18: I am currently enrolled in individual market health insurance coverage, but I am
potentially an Assistance Eligible Individual. Can I switch to COBRA continuation
coverage with premium assistance?

A:  Yes, Potential Assistance Eligible Individuals can use the election period to change from
individual market health insurance coverage (that they got either through a Health Insurance
Marketplace®, such as through HealthCare.gov, or outside of the Marketplace) to COBRA
continuation coverage with premium assistance. Additionally, you may apply for and, if eligible
enroll in Medicaid at any time. If you elect to enroll in COBRA continuation coverage with
premium assistance, you will no longer be eligible for a premium tax credit, or advance
payments of the premium tax credit, for Marketplace coverage you other-wise would qualify for
during this premium assistance period. You must contact the Marketplace to let them know that
you’ve enrolled in other minimum essential coverage or you may have to repay some or all of the
advance payments of the premium tax credit made on your behalf during the period you were
enrolled in both COBRA continuation coverage and Marketplace coverage. This repayment
would be required when filing your income tax return for 2021 (see additional information about
contacting the Marketplace below).

Q19: Can I end my individual health insurance coverage retroactively if I can qualify for
COBRA with premium assistance starting on April 1?

A:  Enrollees generally are not permitted to terminate coverage purchased through a Marketplace
retroactively. You must do so prospectively. If you want to end coverage that you got from a
Health Insurance Marketplace®, such as on HealthCare.gov, because you want to change to
COBRA continuation coverage with premium assistance, you must update your Marketplace
application or call the Marketplace to do so. If you enrolled in coverage through HealthCare.gov,
you can call 1-800-318-2596 (TTY: 1-855-889-4325). If your state has its own Marketplace
platform, find contact information for your State Marketplace here:
https://www.healthcare.gov/marketplace-in-your-state/.

If you want to end individual health insurance coverage that you got outside of a Marketplace,
such as directly from an insurance company, you must contact the insurance company to do so.

Q20: What should I consider when making a decision whether to continue with individual
market health insurance coverage or change to COBRA continuation coverage with
premium assistance?

A:  You should consider the factors you normally would when deciding on which health insurance
coverage is right for you and your family. For example, in addition to premium cost, you may
want to compare cost-sharing requirements such as plan deductibles and copays. You may also
want to consider how much progress you have made toward your deductible and other plan
accumulators, and compare different plans’ and coverage options’ provider networks and
prescription drug formularies based on your family’s medical care needs. Note, however, that if
you are currently employed by the employer offering the COBRA continuation coverage with
premium assistance, you may enroll in Marketplace coverage but are ineligible for a subsidy or a
premium tax credit for the Marketplace coverage for the period you are offered the COBRA
continuation coverage with premium assistance.

Q21: Can I qualify for a special enrollment period (SEP) to enroll in individual market
health insurance coverage, such as through a Health Insurance Marketplace®, when my
COBRA premium assistance ends on September 30? What about if my COBRA
continuation coverage ends sooner than that?

A:  When your COBRA premium assistance ends, you may be eligible for a SEP to enroll in
coverage through a Health Insurance Marketplace®, or to enroll in individual health insurance
coverage outside of the Marketplace. You may also qualify for a SEP when you reach the end of
your maximum COBRA coverage period. For more information about this SEP, see:
https://www.healthcare.gov/unemployed/cobra-coverage/.

For more information about enrolling in Marketplace coverage, see: HealthCare.gov, or you can
call 1-800-318-2596 (TTY: 1-855-889-4325). If your state has its own Marketplace platform,
find contact information for your State Marketplace here:
https://www.healthcare.gov/marketplace-in-your-state/.

You may apply for and, if eligible, enroll in Medicaid coverage at any time. For more
information, go to: https://www.healthcare.gov/medicaid-chip/getting-medicaid-chip/.

More Information
Q21: How can I get more information on my eligibility for COBRA continuation coverage
or the premium assistance, including help if my employer has denied my request for the
premium assistance?

A:  For group health plans sponsored by private-sector employers, guidance and other information is
available on the DOL web site at https://www.dol.gov/cobra-subsidy. You can also contact one
of EBSA’s Benefits Advisors at https://askebsa.dol.gov or 1.866.444.3272.

EBSA’s Benefits Advisors may also be able to assist if you feel that your plan or employer has
improperly denied your request for treatment as an Assistance Eligible Individual. Employers
and plans may be subject to an excise tax under the Internal Revenue Code for failing to satisfy
the COBRA continuation coverage requirements. This tax could be as much as $100 per qualified
beneficiary, but not more than $200 per family, for each day that the plan or employer is in
violation of the COBRA rules. If you feel you may have been improperly denied premium
assistance, contact EBSA at askebsa.dol.gov or 1.866.444.3272.

If you work for a state or local government employer and have questions regarding the premium
assistance, please contact the Centers for Medicare & Medicaid Services via email at
phig@cms.hhs.gov or call 410-786-1565.