COBRA Subsidy Included in the American Rescue Plan
For company-sponsored health plans, Congress recently passed legislation stating that the federal government will pay 100% of COBRA premium payments (which includes the 2% administrative fee) beginning April 1, 2021 through September 30, 2021 for qualified beneficiaries who are currently eligible for COBRA and who:
- Did not voluntarily terminate their employment
- Declined COBRA earlier but are still within their COBRA election period had they elected COBRA, OR
- Dropped COBRA but would still be within their COBRA period if they had not dropped their COBRA coverage
Employers will be able to obtain the subsidy through a tax credit against their quarterly taxes.
While model notices and regulations relating to the COBRA subsidy legislation are expected, Lifetime Benefit Solutions (LBS) is working to understand and implement the legislation. We will follow up with an additional communication prior to contacting your members regarding the subsidy.
Update: Employee Benefits Security Administration (EBSA) Disaster Relief Notice 2021-01
After further evaluation and internal discussions, we’re providing new details regarding our approach to this notice and the impacts it has, specifically for:
- COBRA Participants in Their Tolling Period
- Identifying those individuals
- Handling members who have payments in arrears
- Member terminations
- Electing COBRA Coverage for Individuals with Future Qualifying Event Dates
- Reimbursement Accounts