By Lee Allphin, Employer Advantage Founder and Chairman of the Board
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Employers and other group health plan issuers are subject to the new COBRA requirements published on April 7, 2021, by the US Department of Labor. The updated FAQs and model notices for the Consolidated Omnibus Budget Reconciliation Act (COBRA) pertain to the new premium assistance provisions created as part of the American Rescue Plan Act of 2021 (ARPA).
Individuals are considered assistance-eligible for the COBRA premium subsidy if they had a reduction of hours or had their employment terminated involuntarily during the six-month period outlined in the subsidy, which will also subsidize premiums as if they were paid in full.
The details of these requirements will be critical for businesses to understand if they wish to stay COBRA-compliant.
What and When:
Under the ARPA, “Assistance Eligible Individuals” may elect to continue employment-based group health plan coverage for up to six months – from April 1, 2021, through September 30, 2021 – without paying COBRA premiums. Employers or plan issuers must pay premiums on behalf of such individuals and will be reimbursed through a COBRA premium assistance tax credit.
To be an “Assistance Eligible Individual” under the ARPA, an individual must meet the following requirements:
- MUST have a COBRA-qualifying event that is a reduction of hours or an involuntary termination of employment (NOT including a voluntary termination or a termination for gross misconduct).
- MUST elect COBRA continuation coverage.
- MUST NOT be eligible for Medicare; and
- MUST NOT be eligible for coverage under any other group health plans, such as a plan sponsored by a new employer or a spouse’s employer.
Assistance will end earlier if an individual:
- Reaches the end of their maximum 18-month COBRA continuation period; or
- Becomes eligible for Medicare or other group health plan coverage (including from a new employer).
Notice Requirements: Employers and other plan issuers must notify qualified beneficiaries about COBRA premium assistance and other rights as follows:
- All qualified beneficiaries who have a qualifying event between April 1, 2021, and September 30, 2021, must provide a Summary of COBRA Premium Assistance Provisions and ARPA General Notice or an alternative notice for plans covered by state laws. These notices should be provided in accordance with existing requirements per the manner and timing of COBRA notices.
- For any qualified beneficiary who had a qualifying event before April 1, 2021, a Summary of COBRA Premium Assistance Provisions and Notice of Extended COBRA election period must be provided. This notice must be provided by May 31, 2021. This additional election period does not extend the period of COBRA continuation coverage beyond the original maximum period if COBRA had been elected at the time of the qualifying event.
Eligible individuals have 60 days after receipt of the applicable COBRA notice to elect COBRA continuation coverage with premium assistance.
Employers and plan issuers are also required to provide “Assistance Eligible Individuals” with a Notice of Expiration of Period of Premium Assistance 15-45 days before the recipient’s premium assistance expires.
Additional Election Opportunities: The ARPA provides additional COBRA election opportunities under certain circumstances:
- Group health plans may (but are not required to) offer “Assistance Eligible Individuals” the option to choose coverage different from that which they had at the time of the COBRA qualifying event, subject to certain restrictions and additional notice requirements.
- If a family member of an “Assistance Eligible Individual” did not initially elect COBRA continuation at the time of a qualifying event, they have an additional opportunity to enroll with premium assistance. This will not extend the period of COBRA continuation coverage beyond the original maximum period.
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