Subsidized COBRA Notices Are Here! What You Need to Do Next!
Who Is Eligible?
The American Rescue Act has several provisions, one of which is that employers must offer COBRA coverage with a 100% company paid subsidy to former employees and their dependents who were involuntarily terminated if they were enrolled in the company’s health insurance at the time of termination. This also applies to current employees and their dependents enrolled in the company’s group plan who lost health insurance because their hours were reduced. Employees who voluntarily left the company are not eligible for this assistance.
The eligible individuals described above can elect COBRA coverage beginning April 1, 2021, through September 30, 2021, even if they declined coverage at the time of their loss of coverage. The employer would pay the COBRA premiums and the qualifying individuals would pay nothing for their COBRA coverage during this period. The employer will offset the cost by claiming a credit against Medicare payroll taxes.
Employers will need to determine which employees/dependents lost health plan coverage within the past 18 months (on or after November 1, 2019), due to an involuntary termination of employment or reduction in hours. Employers must send a notice to each of these employees (and their covered family members) within 60 days of April 1st, 2021.
Downloadable Notices for Employers
The Department of Labor (DOL) has now released the model notices for use in communicating this to the eligible individuals. Employers do not need to use these notices, however, the DOL considers the use of them shows a good faith effort to comply with the requirement as long as the proper information is filled out on the model notices.
The DOL made several notices available for the employers use:
1. General Notice and COBRA Continuation Coverage Election Notice (Download) – Sent to COBRA eligible individuals who have any type of qualifying event (not limited to reductions in hours and involuntary terminations of employment) between April 1, 2021, through September 30, 2021. This notice is a new version of the regular COBRA Election Notice updated to include the information on the subsidy.
2. Model Notice in Connection with Extended Election Period (Download) – Sent to eligible individuals whose COBRA qualifying events were a reduction in hours (voluntary or involuntary), or an involuntary termination of employment before April 1, 2021, and who are enrolled in COBRA on April 1, 2021, or could have been enrolled in COBRA coverage on April 1, 2021, if they had elected COBRA and paid COBRA premiums. The deadline to send the Notice of Extended Election Period is May 31, 2021.
3. Summary of COBRA Premium Assistance under the American Rescue Plan (Download) – Must be sent with #1 and #2 notices above.
4. Model Notice of Expiration of Premium Assistance (Download) – Sent to eligible individuals who are receiving the subsidized COBRA between 15 and 45 days before their subsidy period will expire.
How SDHRC Can Help
The paperwork involved with this process can be overwhelming! We can help and take the burden of acting as the paperwork police off your shoulders. This allows you to do what you love! Run your business and keep your customers happy! Contact us today with any additional questions you may have regarding eligibility, notices, and more
About the Author
Traci Hagan, “Treasure Trove”
Traci is an HR Consultant who has been with SDHRC for over 2 years but has over 32 years of experience in employee relations, conflict resolution benefits administration, training and development, workers’ comp and staffing! Traci is also a Professor who enjoys traveling and spending time with her 16-year-old “puppy”.