[Federal Register Volume 86, Number 68 (Monday, April 12, 2021)]
[Notices]
[Pages 19027-19029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07467]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Publication of Model Notices for Health Care Continuation 
Coverage Provided Pursuant to the Consolidated Omnibus Budget 
Reconciliation Act (COBRA) and Other Health Care Continuation Coverage, 
as Required by the American Rescue Plan Act of 2021, Notice

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Notice of the availability of the model health care 
continuation coverage notices required by the American Rescue Plan Act 
of 2021.

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SUMMARY: On March 11, 2021, President Biden signed the American Rescue 
Plan Act of 2021 (ARP). Section 9501(a)(5)(D) and (6)(D) of ARP directs 
the Department of Labor (Department) to develop model notices for use 
by group health plans and other entities that, pursuant to the ARP, 
must provide notices of the availability of premium reductions and 
additional election periods for health care continuation coverage. This 
document announces the availability of the model notices.

DATES: April 12, 2021.

FOR FURTHER INFORMATION CONTACT: David Sydlik, Office of Health Plan 
Standards and Compliance Assistance, Employee Benefits Security 
Administration, (202) 693-8335. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

I. Background

    The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) 
created the health care continuation coverage provisions of title I of 
the Employee Retirement Income Security Act of 1974 (ERISA), the 
Internal Revenue Code (Code), and title XXII of the Public Health 
Service Act (PHS Act). These provisions are commonly referred to as the 
COBRA continuation provisions, and the continuation coverage that they 
mandate is commonly referred to as COBRA continuation coverage. Under 
the ARP, premium assistance is available to certain individuals who are 
eligible for COBRA continuation coverage due to a qualifying event that 
is a reduction in hours or an involuntary termination. If an individual 
qualifies for the premium assistance, the individual need not pay any 
of the COBRA premium otherwise due to the plan. This premium assistance 
is available for COBRA continuation coverage for periods of coverage 
from April 1, 2021 through September 30, 2021. Group health plans 
subject to the COBRA continuation provisions are subject to the ARP's 
premium assistance provisions, notice requirements, and an additional 
election period. Federal COBRA continuation coverage provisions do not 
apply to group health plans sponsored by employers with fewer than 20 
employees. However, participants and beneficiaries of group health 
plans sponsored by employers with fewer than 20 employees may be 
eligible for the premium assistance under state laws that provide 
comparable coverage, often referred to as ``mini-Cobra,'' with an 
alternative notice required under the ARP for these plans not subject 
to federal COBRA laws.\1\
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    \1\ Under COBRA, group health plans must provide covered 
employees and their families with certain notices explaining their 
COBRA rights. A group health plan must provide covered employees and 
qualified beneficiaries with a notice which describes their right to 
COBRA continuation coverage and how to make an election (election 
notice). The ARP provides that COBRA election notices already 
provided for qualifying events occurring during this time period but 
which did not include information on the availability of the premium 
assistance are not complete. As such, the end of the 60-day period 
for electing COBRA continuation coverage is measured from when a 
complete notice is provided. Moreover, although under COBRA a timely 
election generally requires a plan to make coverage available 
retroactively to the date of the loss of coverage, the ARP allows an 
individual to elect COBRA continuation coverage with premium 
assistance for a period beginning on or after April 1, 2021.
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    The ARP requires group health plans to provide four notices: (1) A 
``General Notice,'' (2) an ``Alternative Notice,'' (3) a ``Notice in 
Connection with Extended Election Periods,'' and (4) a ``Notice of 
Expiration of Period of Premium Assistance.'' Under ARP section 
9501(a)(5)(B), the General Notice, the Alternative Notice, and the 
Notice in Connection with Extended Election Periods must include:
     A prominent description of the availability of the premium 
assistance, including any conditions on the entitlement;
     a form to request treatment as an ``Assistance Eligible 
Individual'' \2\;
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    \2\ In general, an ``Assistance Eligible Individual'' is, with 
respect to coverage beginning April 1, 2021 and ending September 30, 
2021, an individual who is eligible for COBRA continuation coverage 
as a result of a reduction in hours or an involuntary termination of 
employment; and who elects COBRA coverage (when first offered or 
during the additional election period).
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     the name, address, and telephone number of the plan 
administrator (and any other person with relevant information about the 
premium assistance);
     a description of the obligation of individuals paying 
reduced premiums who become eligible for other coverage to notify the 
plan and the penalty for failing to meet this obligation; and
     (if applicable) a description of the opportunity to switch 
coverage options.
    The Notice in Connection with Extended Election Periods must also 
include a description of the extended election period. The ARP also 
requires group health plans to provide a Notice of Expiration of Period 
of Premium Assistance to individuals whose premium assistance is coming 
to an end (whether due to the expiration of their COBRA continuation 
coverage or the expiration of the period of premium assistance), which 
must explain that the premium assistance for such individual will 
expire soon; include a prominent identification of the date of such 
expiration; and explain that such individual may be eligible for 
coverage without any premium assistance through--(I) COBRA continuation 
coverage; or (II) coverage under a group health plan. This notice must 
be provided within the period that is 45 days before the date of such 
expiration and ending on the day that is 15 days before the date of 
such expiration. The Departments of Labor and the Treasury share 
jurisdiction for enforcement of the COBRA continuation provisions. The 
Department of Labor is committed to

[[Page 19028]]

ensuring that individuals receive the benefits to which they are 
entitled to under ARP. Failure to satisfy the COBRA continuation 
coverage requirements, including the failure to provide these required 
notices, may subject a plan to an excise tax under Internal Revenue 
Code section 4980B. 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.
    Finally, the ARP provides that premium assistance is not available 
for months of coverage beginning on or after the date the individual 
becomes eligible for coverage under a group health plan (other than 
excepted benefits, a health flexible spending account (FSA), or a 
qualified small employer health reimbursement arrangement (QSEHRA)) or 
the individual becomes eligible for Medicare. Additionally, the ARP 
provides that the health coverage tax credit may not be claimed for 
months of COBRA continuation coverage with premium assistance.\3\ The 
ARP requires assistance eligible individuals receiving the premium 
assistance to notify their plan if they become eligible for coverage 
under another group health plan (not including excepted benefits, a 
QSEHRA, or a health FSA), or if they become eligible for Medicare, and 
failure to do so can result in a tax penalty. Such notice must be 
provided to the group health plan in such time and manner as specified 
by the Department of Labor. The Department has provided a model 
``Participant Notification'' form in the Summary of the COBRA Premium 
Assistance Provisions under the American Rescue Plan Act of 2021, to be 
provided with the ARP General Notice, a Notice in Connection with 
Extended Election Periods, and the Alternative Notice.
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    \3\ A former employee will not be eligible for a premium tax 
credit, or advance payments of the premium tax credit, for 
Marketplace coverage for months the individual is enrolled in COBRA 
continuation coverage with premium assistance. Treas. Reg. sec. 
1.36B-2(c)(3)(v). Additionally, a current employee who is offered 
COBRA continuation coverage with premium assistance by the 
employee's employer may not be eligible for a premium tax credit, or 
advance payments of the premium tax credit, for Marketplace 
coverage.
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II. Description of the Model Notice Disclosures

a. In General

    In an effort to ensure that participants and beneficiaries receive 
all of the information required under the ARP while minimizing the 
burden imposed on group health plans and issuers, the Department 
created several model documents. These model documents include an ARP 
General Notice, a Notice in Connection with Extended Election Periods, 
an Alternative Notice, and a Notice of Expiration of Period of Premium 
Assistance. These documents are discussed further below. In addition to 
these model documents, the Department also developed a Summary of ARP 
requirements to include the following supplemental disclosures, which 
should be included with the ARP General Notice, the Alternative Notice, 
and the Notice in Connection with Extended Election Periods:
    i. A summary of the ARP's premium assistance provisions.
    ii. A form to request the premium assistance under the ARP.
    iii. A form for an individual to use to satisfy the ARP's 
requirement to notify the plan (or issuer) that the individual is 
eligible for other group health plan coverage (other than coverage 
consisting of only excepted benefits, coverage under a health FSA, or 
coverage under a QSEHRA) or that the individual is eligible for 
Medicare.
    Each model notice is designed for a particular group of qualified 
beneficiaries. When provided in combination with these supplemental 
disclosures, these model documents contain all of the information 
needed to satisfy the content requirements for the ARP's notice 
provisions.

b. ARP General Notice

    Group health plans subject to the COBRA continuation provisions 
must provide a general notice including the required disclosures under 
ARP section 9501(a)(5)(B) (ARP General Notice) to all qualified 
beneficiaries, not just covered employees, who have experienced any 
COBRA qualifying event at any time from April 1, 2021 through September 
30, 2021.
    The ARP General Notice includes information related to the premium 
assistance, and other rights and obligations under the ARP, as well as 
all of the information required in an election notice required pursuant 
to the Department of Labor's final COBRA notice regulations under 29 
CFR 2590.606-4(b). This notice also provides additional information on 
the Health Insurance Marketplace[supreg],\4\ Medicaid, and interaction 
with Medicare. Providing the ARP General Notice (with the supplemental 
disclosure summarizing the ARP requirements discussed above) to 
individuals who have experienced a qualifying event from April 1, 2021 
through September 30, 2021 will satisfy the Department of Labor's 
existing requirements for the content of this COBRA election notice as 
well as those required by ARP.\5\
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    \4\ Health Insurance Marketplace[supreg] is a registered service 
mark of the U.S. Department of Health & Human Services.
    \5\ In general, qualified beneficiaries have 60 days to respond 
to a COBRA election notice. Due to the COVID-19 National Emergency, 
the Department of Labor, the Department of the Treasury, and the 
Internal Revenue Service issued a Notice of Extension of Certain 
Timeframes for Employee Benefit Plans, Participants, and 
Beneficiaries Affected by the COVID-19 Outbreak (``Joint Notice''). 
85 FR 26351 (May 4, 2020). 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 and the date for 
making COBRA premium payments. The Department of Labor's Employee 
Benefits Security Administration (EBSA) provided further guidance on 
this relief in EBSA Disaster Relief Notice 2021-01, which is 
available at https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/disaster-relief/ebsa-disaster-relief-notice-2021-01.pdf. These extended deadlines do 
not apply, however, to notices and elections, including the 60-day 
ARP election period, related to COBRA continuation coverage with 
premium assistance available to Assistance Eligible Individuals as 
provided under the ARP.
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c. Notice in Connection With Extended Election Periods

    Section 9501(a)(5)(C) of the ARP requires group health plans to 
provide a Notice in Connection with Extended Election Periods that 
includes the required disclosures under ARP section 9501(a)(5)(B) 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 became entitled to elect COBRA 
continuation coverage before April 1, 2021. This notice must be 
provided by May 31, 2021, which is 60 days after the first day of the 
first month after the ARP was enacted.

d. Notice of Expiration of Period of Premium Assistance

    Section 9501(a)(6) of the ARP requires a notice of expiration of 
period of premium assistance. This notice must include a written 
notice, in clear and understandable language, that the premium 
assistance for such individual will expire soon and the prominent 
identification of the date of such expiration; and that such individual 
may be eligible for coverage without any premium assistance through--
(I) COBRA continuation coverage; or (II) coverage under a group health 
plan. This notice is not required to be provided if eligibility for the 
premium assistance ends because the individual has become eligible for 
another group health plan (excluding excepted

[[Page 19029]]

benefits, a QSEHRA, or a health FSA), or if the individual has become 
eligible for Medicare. This notice is not required to, but may note 
that the individual and any covered dependents may be eligible for a 
special enrollment period to enroll in individual market health 
insurance coverage offered through a Health Insurance 
Marketplace[supreg]. This notice must be provided 15-45 days before the 
date of expiration of premium assistance.

e. Alternative Notice

    While COBRA provides continuation coverage requirements for group 
health plans under federal law, these requirements do not apply to 
every plan. For example, group health plans maintained by an employer 
that employed fewer than 20 employees in the previous calendar year are 
not subject to federal COBRA.\6\ However, many states have laws similar 
to COBRA, including those that apply to health insurers of employers 
with less than 20 employees (mini-COBRA). The Alternative Notice is 
required to be sent by issuers that offer group health insurance 
coverage subject to such continuation coverage requirements imposed by 
state law. The Alternative Notice must include the information 
described above and be provided to all qualified beneficiaries, not 
just covered employees, who have experienced a qualifying event at any 
time from April 1, 2021 through September 30, 2021, regardless of the 
type of qualifying event. The Department of Labor, in consultation with 
the Departments of the Treasury and Health and Human Services, is 
required to consult with administrators of the group health plan and 
other stakeholders, to provide rules requiring the provision of such 
notice and a model notice. The Department has engaged in such 
consultations through meetings with administrators of group health 
plans and other stakeholders prior to the issuance of this notice and 
the model notices.
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    \6\ 26 CFR 54.4980B-2.
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    Continuation coverage requirements vary among states. Thus, the 
Department crafted a single version of this notice that should be 
modified to reflect the requirements of the applicable State law. 
Issuers of group health insurance coverage subject to this notice 
requirement may also use the model Alternative Notice.

III. For Additional Information

    For additional information about ARP's COBRA premium assistance 
provisions, contact the Department's Employee Benefits Security 
Administration's Benefits Advisors at askebsa.dol.gov or 1-866-444-
3272. In addition, the Employee Benefits Security Administration has 
developed a dedicated COBRA web page https://www.dol.gov/cobra-subsidy 
that will contain information on the program as it is developed. 
Subscribe to this page to get up-to-date fact sheets, FAQs, model 
notices, and applications.

IV. Paperwork Reduction Act Statement

    According to the Paperwork Reduction Act of 1995 (Pub. L. 104-13) 
(PRA), no persons are required to respond to a collection of 
information unless such collection displays a valid Office of 
Management and Budget (OMB) control number. The Department notes that a 
Federal agency cannot conduct or sponsor a collection of information 
unless it is approved by OMB under the PRA, and displays a currently 
valid OMB control number, and the public is not required to respond to 
a collection of information unless it displays a currently valid OMB 
control number. See 44 U.S.C. 3507. Also, notwithstanding any other 
provisions of law, no person shall be subject to penalty for failing to 
comply with a collection of information if the collection of 
information does not display a currently valid OMB control number. See 
44 U.S.C. 3512.
    Interested parties are encouraged to send comments regarding the 
burden estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden, to the U.S. Department 
of Labor, Office of Regulations and Interpretations, Attention: PRA 
Clearance Officer, 200 Constitution Avenue NW, Room N-5718, Washington, 
DC 20210 or email [email protected] and reference the OMB Control Number 
1210-XXXX.
    The public reporting burden for this collection of information is 
shown in the following table.

V. Models

    Model notices are available in modifiable, electronic form on its 
website: https://www.dol.gov/cobra-subsidy.

VI. Statutory Authority

    Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1169, 1191c; Pub. L. 
117-2 (2021) sec. 9501; and Secretary of Labor's Order No. 1-2003, 
68 FR 5374 (Feb. 3, 2003).

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              Notice type                     Estimated average time
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General Notice.........................  Minimal additional burden as
                                          already covered under OMB
                                          Control Number 1210-0123.
Notice in Connection with Extended       1 minute per response.
 Election Periods.
Alternative Notice.....................  2 minutes per response.
Notice of Expiration of Premium          1 minute per response.
 Assistance.
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    Signed at Washington, DC, this 7th day of April, 2021.
Ali Khawar,
Acting Assistant Secretary, Employee Benefits Security Administration.
[FR Doc. 2021-07467 Filed 4-9-21; 8:45 am]
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