If you have employees who are eligible for COBRA coverage because of job changes outside of their control, here’s good news. They may be eligible to have their premiums fully paid between April 1, 2021 and September 30, 2021.
This provision of the recent American Rescue Plan Act (ARPA) applies to employees in these situations:
- The employee’s hours were reduced or their job was involuntarily terminated.
- This includes a change in a company’s hours, a change from full time to part time, or a temporary leave of absence.
- This does not include an employee’s termination due to gross misconduct.
- Premium assistance is not available to employees who voluntarily quit their job.
- The employee elects COBRA continuation coverage. If the employee initially declined COBRA continuation coverage but is still within the COBRA coverage period, he/she has a new opportunity to elect COBRA and receive premium assistance.
- The employee is not eligible for other group health coverage. If the employee is eligible for a new employer’s plan, spouse’s plan, or Medicare, the employee is not eligible for premium assistance.
- If the employee is initially eligible for premium assistance but becomes eligible for another group health plan between April 1 – September 30, the employee becomes no longer eligible for premium assistance.
- The employee is within the COBRA continuation period. If an employee’s COBRA continuation ends between April 1 – September 30, 2021, the employee is no longer eligible for premium assistance.
- Generally, COBRA coverage is available to employees for 18 months from the date of the employee’s reduction in hours or involuntary termination.
- Notify eligible employees and beneficiaries of the premium assistance and extended COBRA election period. The DOL has created a Model Notice for this purpose – you can find the Word version that can be customized for your organization’s health insurance plan by clicking here.
- This notification needs to be provided to any employees who had a reduction in hours or were involuntarily terminated before April 1, 2021 but who are still within their COBRA continuation period (usually 18 months). The deadline for this notification is May 31, 2021 (60 days after the enactment of the ARPA), and the employee has 60 days after the notice is provided to elect COBRA.
- Employees whose hours are reduced or who are involuntarily terminated after April 1, 2021 but before September 30, 2021 need to be provided with the premium assistance notice at the same time as their COBRA continuation coverage notice.
- Notify employees whose premium assistance is expiring 15-45 days before the expiration date. This notice needs to explain that the assistance is expiring soon, the date of the expiration, and that the individual may be eligible to continue COBRA by paying the full premium. A sample notice in Word format that can be customized for your organization’s plan can be found here.
In order to receive premium assistance, the eligible employee must elect COBRA continuation coverage from the employer within 60 days of the notice.
If an employee has already declined COBRA but is still within their COBRA continuation period, the employee can complete and return the “Request for Treatment as an Assistance Eligible Individual” form to the employer along with their COBRA election form within 60 days in order to receive premium assistance.
The employee does not need to pay any premiums, since the employer will be reimbursed for the cost of premiums (see Employer Responsibilities above).
If an employee believes they are eligible for premium assistance but does not receive notification from their employer, they can request to be treated as an Assistance Eligible Individual by using the “Request for Treatment as an Assistance Eligible Individual” form linked in item #2 above.
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