Under the American Rescue Plan Act of 2021, certain individuals entitled to continued medical care under the Consolidated Omnibus Budget and Reconciliation Act 1985, as amended (COBRA) or other similar state and local laws, have been elected by the Federal government subsidized COBRA continuing coverage, which begins on April 1, 2021 and ends on September 30, 2021.
As we wrote earlier, group health plans must inform qualified beneficiaries in a number of ways of their rights to subsidized COBRA under the law. To this end, DOL has published three model notices along with a number of frequently asked questions about the implementation of the law.
For the specific notifications, employers must first provide a general notification to all qualified beneficiaries who have a COBRA qualifying event consisting of a reduction in working hours or involuntary termination of employment from April 1, 2021 to September 30, 2021. The announcement can be made separately or in conjunction with the plan’s regular COBRA election notification following a COBRA qualifying event. You can find the sample note for this purpose here.
Second, the law also mandates that health plans subject to COBRA, individuals who are eligible for the COBRA subsidy and who have not chosen COBRA continuing coverage (or who have canceled COBRA continuing coverage) a special COBRA term in order to enroll for this subsidy. COBRA coverage begins April 1, 2021 and ends 60 days after an updated COBRA notice is sent to the terminated employees. Former employees and their dependents who lost health insurance on October 1, 2019 can benefit from the subsidy as their maximum COBRA period of 18 months does not expire before April 1, 2021. The law requires health insurers to report this to individuals who are eligible for that particular COBRA term within 60 days of the passage of the law that sets a deadline of May 31, 2021. You can find the sample note for this purpose here. This notification poses a challenge for many employers as they have to address this notification (or their own notification) to employees who already lost health insurance coverage in October 2019 due to termination of the employment relationship or a reduction in working hours.
Finally, individuals in receipt of a grant must receive an additional notice informing them of the expiry of their grant between 15 and 45 days before the grant expires. The notice must include the expiration date and a comment stating that the individual may be eligible for coverage without premium support from COBRA continuing coverage or coverage under a group health plan. You can find the sample note for this purpose here.
The DOL previously changed the timing of the COBRA notifications due to the national COVID-19 emergency. However, these DOL guidelines indicate that the extensions for other COBRA notices do not apply to these notices required by law. The DOL has stated that it is committed to ensuring that individuals receive benefits to which they are legally entitled, and its guidelines state that employers must charge an excise tax of $ 100 per qualified beneficiary (up to $ 200 per day) for each day per family) may be subject to the fact that an employer violates the COBRA rules if he does not provide the required notifications.