On Wednesday, April 7, 2021, the Department of Labor issued a set of frequently asked questions on the COBRA subsidies created by the American Rescue Plan Act (ARPA), along with five model notices needed to help implement the subsidies.

The FAQs themselves largely reiterate information about the subsidy that was included in the statute. However, they do highlight certain points that are worth reiterating. Specifically, the FAQs emphasize that:

• A qualified beneficiary (i.e., a person otherwise eligible for COBRA) may be eligible for the subsidy only if the applicable qualifying event is a reduction in hours or an involuntary termination of employment. Note that the FAQs do not include additional guidance for employers on how to define involuntary termination but do reiterate that COBRA is not available in the case of a termination for gross misconduct.
• Any reduction in hours can count for this purpose (whether or not that reduction was voluntary). Examples of reductions in hours that could trigger a termination of coverage include a change in a business's hours, moving from full-time to part-time, and a temporary leave of absence that results in a loss of coverage.  
• Eligibility for a major medical plan sponsored by another employer makes a qualified beneficiary ineligible for the subsidy. This is the case even if that coverage is available through a spouse's employer.
• The subsidy IS available for excepted benefits, including stand-alone dental and vision plans.
• An individual may be eligible for the subsidy if they are currently covered through a government exchange or Medicaid. However, if they elect the subsidy, they will lose any applicable premium tax credit.
• Individuals are required to notify the plan sponsor if they are or become ineligible for the subsidy. Failure to do so will trigger a $250 penalty (or 110% of the premium if the failure is fraudulent).
• The subsidy and opportunity to elect coverage are available even if the qualified beneficiary experienced a break in coverage (i.e., has not been on COBRA since their original eligibility date).
• After a subsidy election is made, coverage can begin prospectively or retroactively to April 1, 2021. Note that the election DOES NOT need to be retroactive to the date of the original loss of coverage. A break in coverage is permitted for this purpose.
• Individuals eligible for the subsidy will have 60 days from the date of their election notice to elect the subsidized coverage. The extended timeframes under the Outbreak Period rules DO NOT apply to the COBRA subsidy.