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Notice About Deadline for COBRA Election

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The American Rescue Plan Act of 2021 (“ARP”) includes a 100% COBRA temporary subsidy for certain eligible individuals (“Assistance Eligible Individuals”) who lost health care coverage due to an involuntary termination of employment or a reduction in hours. ARP will subsidize 100% of an Assistance Eligible Individual’s premium cost for COBRA continuation coverage from April 1, 2021 through Sept. 30, 2021. The deadline for providing notice to Assistance Eligible Individuals who previously incurred an involuntary termination of employment or a reduction in hours COBRA qualifying event is May 31, 2021.

Who is Eligible for COBRA Premium Assistance?

Premium assistance is available to “Assistance Eligible Individuals” who incurred a COBRA qualifying event due to an involuntary termination of employment or a voluntary or involuntary reduction in hours and who elect COBRA coverage.

Who is Not Eligible for COBRA Premium Assistance?

Individuals who are eligible for other group health coverage, either through a new employer or through a spouse’s group health plan, or who are eligible for Medicare are not eligible for premium assistance.

If the employee’s termination of employment was for gross misconduct, the employee and any dependents would not qualify for COBRA continuation coverage or the premium assistance.

What Notice Requirements Apply Under the ARP?

The ARP imposes the following notice requirements on group health plans and issuers: 

  • General notice of COBRA premium assistance to qualified beneficiaries who incur an involuntary termination of employment or a reduction in hours between April 1, 2021 and September 30, 2021.
  • A notice of a special COBRA election for qualified beneficiaries who incurred an involuntary termination of employment or a reduction in hours prior to April 1, 2021 and whose maximum COBRA election period (typically 18 months) has not expired, which generally means qualifying events prior to October 1, 2019. This notice is required by May 31, 2021, which is 60 days from the April 1, 2021 start date for premium assistance. An employer is not required to send notice of the special extended COBRA election period to individuals who do not satisfy the criteria listed above.
  • Notice of expiration of COBRA premium assistance, including advance notice of when premium assistance will expire, expiration date, and eligibility for continued COBRA coverage paid by the COBRA beneficiary. This notice must be provided 15-45 days before the individual’s premium assistance expires.
  • Employers may be subject to excise taxes for failing to satisfy COBRA continuation requirements. This tax could be as much as $100 per qualified beneficiary, but not more than $200 per family, for each day that the employer is in violation of the COBRA rules.

This means that employers have until May 31, 2021 to send the special COBRA election notices for individuals who qualify for an additional election opportunity under the ARP and that employees and their qualified family members who qualify for the special election opportunity have 60 days after the notice is provided to elect COBRA.

Continuing legislative changes are making COBRA harder to administer, not easier. With the right benefits partner, you can spend your time managing your workforce, not administering COBRA. We can also ensure Open Enrollment, State Continuation, USERRA, and Eligibility are all handled properly. For more information on how AAP can provide you with COBRA administration services contact your payroll specialist or email us at info@aaphcm.com.

Source:  JDSupra April 19, 2021