Thu, 04/22/2021
The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) allows participants and beneficiaries covered by a group health plan to continue their health coverage after a “qualifying event” (typically, termination of employment or a reduction in work hours that causes the employee to lose coverage under the group health plan). Pursuant to COBRA, group health plans must provide qualified beneficiaries with certain notices regarding their rights.
Pursuant to COBRA, qualified beneficiaries who elect to continue their group health plan coverage must pay the premiums – as well as an administration fee – for the coverage. The American Rescue Plan provides premium assistance to help assistance eligible individuals continue their group health plan coverage under COBRA or similar state laws. Under the Plan’s premium assistance, assistance eligible individuals are those who are eligible for COBRA coverage because they have experienced a qualifying event that is a reduction in hours or an involuntary termination of employment, and who elect COBRA continuation coverage. According to DOL, a reduction in hours includes, “reduced hours due to change in a business’s hours of operations, a change from full-time to part-time status, taking of a temporary leave of absence, or an individual’s participation in a lawful labor strike, as long as the individual remains an employee at the time that hours are reduced.” DOL did not explain what an involuntary termination of employment includes.
Assistance eligible individuals do not have to pay the continuation coverage premiums, and the employer or group health plan to whom the premiums are payable is entitled to a tax credit for the amount of the assistance.
The premium assistance is available from April 1, 2021 through September 30, 2021.
For more information on the American Rescue Plan’s COBRA premium subsidy for workers, visit DOL’s website at: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra/premium-subsidy.
