Alert: Model Notices for the COBRA Subsidy Have Been Released
April 16th, 2021
The Department of Labor (DOL) has released model notices that employers should use to alert their former employees about the COBRA subsidy for 2021. From April 1, 2021 extending to September 30, 2021, any employers with plans subject to COBRA continuation will need to offer a 100% subsidy for up to a six-month period. To be eligible, workers need to have lost their coverage for one of two reasons: they were involuntarily terminated, or had a reduction in hours that dropped them below benefits eligibility. This provision also extends the election period for eligible workers who didn’t initially elect to receive COBRA or let it lapse. (Subsidized COBRA coverage will only last the usual 18 months after coverage was lost.) HR providers like MP want employers to also keep in mind that, as per usual COBRA laws, coverage can be extended for a second qualifying event (with coverage totaling up to 36 months).
Here are the five things MP’s HR services team says that employers need to know to stay in compliance:
4 Things Employers Need to Know About the Model Notices and the 2021 COBRA Subsidy
- What are the notice requirements for employers? As per usual COBRA regulations, within 14 days of the qualifying event, employers must give the employee and beneficiaries of their individual rights notice that they can elect COBRA continuation coverage. Employers that are subject to COBRA laws will need to give their employees and former employees notice of the subsidy, the extended election period for COBRA coverage, and the expiration of the subsidy. MP’s HR consulting experts suggest that employers use the model notices that the DOL has issued here. If employers have a third-party administrator (TPA) for their COBRA coverage, they should confirm that the TPA will send the required notices to eligible workers. They will likely need to designate a list of eligible workers to receive the required notices.
- Which employers does the COBRA subsidy apply to? This will apply to employers that either offer a group health plan or a self-funded plan that is subject to COBRA and state continuation (not including health flexible spending accounts (FSA)). Employers are subject to COBRA if they:
- Offer a private-sector group health plan that is maintained by the employers
- Have at least 20 employees (including full and part-time workers) on no more than 50% of a typical business day in the previous calendar year
- Qualify under their state “mini-COBRA” laws
- Which employees will be eligible for the COBRA subsidy? Workers who are eligible for the COBRA subsidy must:
- Qualify as a beneficiary with a qualifying event (as defined by COBRA or state continuation) that occurred November 1, 2019 or after
- Have elected COBRA coverage or
- Have declined or discontinued COBRA coverage, but elected within 60 days of receipt of the new COBRA extension notice
- Not have received other offers of employer-sponsored health insurance or Medicare coverage
- Not have voluntarily resigned from their role
- How does the COBRA subsidy work? Employers, insurers, and multiemployer plan sponsors will cover the complete cost of an eligible employee’s COBRA premium (and the 2% administrative fee). They will be reimbursed though a refundable payroll tax credit against the Section 3111(b) Medicare tax. HR and payroll experts point out that if an employer’s COBRA premium costs for eligible subsidy plan participants exceed their Medicare payroll tax liability, they can use forthcoming guidance from the IRS and DOL to file for a direct payment of the credit amount that remains.
Recent Posts
- The Current Climate of Home Healthcare: Challenges and Opportunities
- Workforce Planning is a Team Sport: Collaborating for Success
- Top Ways to Leverage Technology for Workforce Planning
- Workforce Planning 101: Your Guide to an Effective Strategy
- The Impact of Workforce Planning: By the Numbers
Categories
- ACA (10)
- AI (5)
- BizFeed (6)
- Business Strategy (119)
- COBRA (5)
- Compliance (168)
- COVID-19 (92)
- Diversity (12)
- eBooks (19)
- Employee Engagement (33)
- Employee Handbooks (24)
- ERTC (29)
- FFCRA (7)
- HR (306)
- MP Insider (13)
- Payroll (88)
- PFML (9)
- PPP (24)
- PTO (5)
- Recruiting (53)
- Remote Work (39)
- Return to Work (32)
- Unemployment (1)
- Wellness (22)
Archives
- October 2024
- September 2024
- August 2024
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- January 2023
- December 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020