As we previously reported, the American Rescue Plan Act provides for a temporary 100 percent subsidy of the cost of premiums for COBRA continuation coverage for an employee or dependent who is a COBRA qualified beneficiary due to an involuntary termination of employment or reduction in hours. The law requires employers to send a notice to eligible individuals who incurred an involuntary termination of employment or reduction in hours before April 1, 2021. This notice must be sent by May 31, 2021.

Who must receive a notice?

Employers must send an Extended Election Notice to all individuals (1) who are COBRA qualified beneficiaries due to an involuntary termination of employment or reduction in hours that occurred before April 1, 2021 and (2) whose maximum COBRA coverage period has not expired as of April 1, 2021. Generally, the maximum COBRA coverage period is 18 months.

Under U.S. Department of Labor (DOL) guidance, a reduction in hours includes reduced hours due to a change in a business’s hours of operations, a change from full-time to part-time status, taking a temporary leave of absence or participation in a lawful labor strike. Termination of employment must have been involuntary for an individual to qualify for the COBRA subsidy.

What must be sent?

The DOL published a Model COBRA Continuation Notice in Connection with Extended Election Periods that satisfies the notice requirement under the American Rescue Plan Act.  Employers should also include the DOL’s Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021 in the mailing.

When must the notice be sent?

Employers must send the Extended Election Notice to all qualified individuals by May 31, 2021.

Photo of Abbie Thederahn Abbie Thederahn

As an associate, Abbie assists Porter Wright’s labor and employment lawyers with all aspects of labor and employment law, including regulatory matters as well as litigation.

As a law student, Abbie gained experience as a legal extern with the Ohio Attorney General’s office…

As an associate, Abbie assists Porter Wright’s labor and employment lawyers with all aspects of labor and employment law, including regulatory matters as well as litigation.

As a law student, Abbie gained experience as a legal extern with the Ohio Attorney General’s office, as a judicial extern to the Hon. Christopher A. Boyko of the U.S. District Court for the Northern District of Ohio, and as a summer associate with Porter Wright. She also served as a senior editor of the Case Western Reserve University Law Review.