Should I elect COBRA or enroll in the Exchange?
There are many factors to consider when determining if you should enroll in COBRA or go to the Exchange for your state (or the Federal Exchange if one is not offered in your state). Some considerations: Are you eligible for the Exchange? Will your doctors be included in the networks offered? Will your out-of-pocket expenses […]
Are there any COBRA subsidy penalties?
There are potential penalties for employers and individuals who are not in compliance with the COBRA subsidy rules. For Employers or Plan Sponsors: Employers who violate COBRA rules (including the requirement to offer a COBRA election and subsidies under the ARPA) could be subject to penalties equal to $100 per qualified beneficiary or $200 per […]
Should current COBRA participants continue to pay premiums?
Yes. Until an individual is notified that they are eligible for a COBRA subsidy, active COBRA participants should pay premiums. Active COBRA participants who have paid premiums will either receive a credit against future premium payments or receive a refund if no future premiums are due.
Who receives the subsidy? Does anyone need to pay premiums?
Plan sponsors are responsible for paying premiums to the carrier and will receive a tax credit against their quarterly payroll taxes. The specific process to claim these credits has not yet been released. However, when subsidies were offered under the Affordable Care Act, IRS Form 941 was made available for plan sponsors to claim this […]
Do individuals need to pay premiums for periods prior to the effective date of the subsidy?
If the individual intended to have continuous coverage, they would be responsible for any premiums incurred prior to April 1, 2021. If an individual intends for coverage to begin on April 1, 2021, no premiums will be due.
How long do AEIs have to elect a subsidy?
AEIs will have 60 days from notification to elect coverage under the subsidy. Coverage can be reinstated retroactively to April 1, 2021. AEIs who are not currently enrolled in COBRA will be required to elect coverage through a Second Election Period. All AEIs regardless of their current coverage status will need to formally attest to […]
What is the second election period?
All Assistance Eligible Individuals (AEIs) will have a second election period in which they can elect coverage under the subsidy even if they did not originally enroll in coverage.
When do Assistance Eligible Individuals (AEIs) need to be notified?
AEIs must be notified no later than May 31, 2021 of their right to coverage and will have 60 days to elect coverage.
What types of notifications are required for the COBRA subsidy?
Model General Notice and COBRA Continuation Coverage Election Notice For use by group health plans for qualified beneficiaries who have qualifying events occurring from April 1, 2021 through September 30, 2021 A summary of the subsidy provisions is to be attached and includes a form for individuals to request to be treated as an AEI […]
Is continuous coverage required?
No. Anyone who meets the eligibility requirements and is within their eligible COBRA period (generally 18-months) is eligible for a second election period and may receive a subsidy. This includes: Individuals that enrolled in COBRA and paid premiums monthly. Individuals that enrolled in COBRA but either did not pay premiums or have since dropped COBRA […]
If a person is already receiving a subsidy from an employer, does it preclude them from receiving the COBRA government subsidy?
The COBRA government subsidies are based on the amount the AEI is responsible for. If coverage is already being subsidized, it would not also receive a government subsidy. Employers should consider this when arranging future severance packages.
If an individual has access to coverage through a spouse, but there is an additional charge, can they enroll through the subsidy?
Current guidance indicates that if an individual has access to another group plan, they would not be eligible for a subsidy.
If an individual was given notice of a layoff but resigns prior, would that be considered a voluntary or involuntary term regarding the subsidy?
There has not been clear guidance on the definition of voluntary vs. involuntary termination. Plan sponsors must use their best judgment when identifying assistance eligible individuals. If eligibility is in question, Plan Sponsors may want to take a cautious position and include the individual in the list of AEIs.
If someone is eligible for Medicare, will they be eligible for a subsidy for dental and vision coverage?
At this time, individuals who are eligible for Medicare do not appear to be eligible for any subsidy.
I am currently enrolled through the Individual Marketplace, but I am potentially an AEI. Can I switch to COBRA continuation coverage with premium assistance?
Yes. Individuals can use the election period to change from the marketplace to COBRA continuation coverage.
If someone was eligible back to 11/1/2019 and did not elect coverage when first eligible, can they go all the way back to 11/1/2019 for an effective date?
An individual will need to be in their original election period (including the Pandemic Relief Periods) in order to have continuous coverage. Pandemic Relief Periods end the lessor of 12 months from the original effective date or 60 days following the end of the Pandemic period. Therefore, an individual effective on 11/1/2019, would no longer […]
If an individual did not have health care before, are they eligible for the subsidy?
Eligibility for the subsidy is based on the coverage that was in place at the time of the original qualifying event. If health coverage was not included, they are not able to elect it now.
If an employee is on COBRA due to a leave, would they be eligible for a subsidy?
A leave would generally fall under the reduction of hours provision and the individual would likely be eligible for the subsidy.
Do plan sponsors need to offer a subsidy for terminations due to gross misconduct?
No. If an employer would not have otherwise offered COBRA, the Plan Sponsor is not required to offer the subsidy.
Who is eligible for a subsidy?
A subsidy must be offered to all employees and dependents who experienced a loss of coverage due to involuntary termination or reduction of hours and are within their eligible COBRA period. Individuals who voluntarily termed employment, who are eligible for Medicare or eligible for any other Group Health Plan are not eligible. Check out our […]
What is the subsidy period? When will it end?
The subsidy period begins on April 1, 2021 through September 30, 2021. An individual will no longer be eligible for a subsidy if the individual becomes eligible for other group coverage or when the original COBRA coverage period is set to expire.
What benefits are eligible?
There is a subsidy for 100% of premiums (including 2% administration fees) for the cost of Group Health Plans, including: Medical, Dental, Vision, and most HRAs. The subsidy is available for both fully insured and self-insured plans. Flexible Spending Accounts are not eligible for subsidy.
When are premiums due?
Your first premium is due 45 days from your COBRA election. Subsequent premiums are due the 1st of each month but must be postmarked no later than the 30th. The insurance carrier has the right to suspend your coverage between the 1st and 30th, reinstating benefits when premiums are received.
Are Health Flexible Spending Accounts subject to COBRA?
If you had a positive balance in your account, you will be offered COBRA thru the end of the Plan Year.
