Unemployed to Get Help with COBRA

cobraIn the American Rescue Plan Act (ARPA), which was signed into law by President Biden on March 11, 2021, there are several provisions for healthcare plans, including a 100% subsidy of coverage premiums for eligible COBRA enrollees. The subsidies, which will run from April 1, 2021 through September 30, 2021, will be paid to employers by the federal government as payroll tax credits.

The subsidy will last for six months at most, ending on the earlier of the individual’s maximum period of COBRA coverage (generally 18 months) or September 30, 2021. Subsidies will also end early for individuals who become eligible for coverage under another group health plan or Medicare. Those employees who terminate employment voluntarily are not eligible for the subsidy.

Notices are Required

Employers should talk with their TPA about notice requirements and to determine who may be eligible for the subsidy. As a result of the eligibility period running through April, 2021, a list must be compiled including individuals who terminated employment as far back as November of 2019. A Notice of Assistance must be provided to individuals who become eligible to elect COBRA coverage between April 1 and September 30, 2021. Eligible workers who haven’t elected COBRA by April 1 and those who elected COBRA but then discontinued it must also be notified, since former employees have an extended election period running for 60 days after April 1, 2021.

Finally, a Notice of Expiration must be provided between 45 and 15 days prior to the subsidy expiring, unless the subsidy is expiring because the individual has become eligible for coverage by another group health plan or Medicare. The DOL is expected to issue new model COBRA forms within 30 days of the March 11, 2021 enactment date. In addition, individuals are required to notify the group health plan if they forfeit eligibility because they have become eligible for another group health plan or Medicare.

To learn more about the American Rescue Plan notice requirements, visit https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf or contact us at your convenience.

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Calls for Expanded COBRA Coverage

self-fundingWith nearly 40 million workers laid off or furloughed as a result of the Coronavirus, many organizations have urged Congress to expand COBRA coverage. Most of their concerns are focused on encouraging Congress to subsidize COBRA premiums for these workers so that existing health conditions will not get worse because care is delayed.

To date, the Department of Labor and the IRS have extended the time period workers have to decide to enroll in COBRA. With the President’s order setting the end of the national emergency for COVID-19 at June 29th, individuals would have until August 28th to enroll in COBRA. DOL and IRS have also given workers 30 days beyond the end of the national emergency to pay their COBRA premiums for March, April, May and June. Should the Administration decide to extend the national emergency, these timelines would be adjusted accordingly.

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Special COBRA Coverage Terms for the Departing Executive: Pitfalls to Avoid

It is not uncommon for employers to provide special terms to departing executives regarding their group health coverage that they do not generally offer to rank and file employees.  Common examples include a period of remaining on active coverage status even after employment responsibilities have largely ceased (for instance during any period in which the executive receives severance compensation), or employer payment of COBRA premiums for some period of time after termination.  Generally the terms of the special coverage arrangement are set forth in a separation or severance agreement, and may vary from case to case.  Employers traditionally have exercised a significant degree of discretion in this area without a clear sense of the compliance issues that might arise. Continue reading