If your practice has had to terminate or reduce staff hours – causing them to lose their health insurance benefits – the latest federal COVID-19 relief package includes an extension of COBRA benefits that allows employees to stay on a company-sponsored health plan through September.
The law subsidizes COBRA premiums for eligible employees between April 1 and Sept. 30, 2021. As an employer to whom COBRA premiums are payable, you will be entitled to a tax credit for the amount of the premium assistance under the American Rescue Plan Act, which was signed into law in March.
Eligible employees must:
- Have a COBRA-qualifying event with a reduction of hours, or an involuntary termination of employment;
- Elect COBRA continuation coverage;
- Not be Medicare eligible; and
- Not be eligible for any other group health plan’s coverage, such as plans sponsored by a new employer or a spouse’s employer.
If your practice receives COBRA premiums, the law requires you to provide three notices to qualified individuals about the COBRA subsidy and their related rights:
- A general notice 60 days after a COBRA-qualifying event that occurs between April 1 and Sept. 30.
- A notice to employees who had a COBRA-qualifying event during the COVID-19 public health emergency informing them of the coverage extension. The deadline to distribute this notice is May 31, 2021.
- An alternative notice of state continuation benefits for smaller employers who provide health coverage.
In addition, employers also must attach to the aforementioned memos a notice for eligible individuals to request treatment. Employers also must provide notice of expiration of the subsidy period 15 to 45 days before the subsidy ends on Sept. 30.
Employers who fail to provide these notices may be subject to a federal excise tax.
The Department of Labor’s website includes frequently asked questions, sample notices and more information.
Last Updated On
April 21, 2021
Originally Published On
April 21, 2021