Updated April 13, 2021
Model notices have been released by the Department of Labor (DOL) and may be used as a template for employers to issue the required election notices to eligible COBRA participants. Employers who are self-administering their COBRA benefits should refer to the guidance provided by the DOL or contact their COBRA administrator for further direction.
CalCPA Health, where we are designated as the COBRA administrator, will issue the required notices to qualified participants by the DOL’s deadline. To do so, employers will receive a notice from CalCPA Health requesting a list involuntarily terminated employees. Please note that employers MUST respond timely to the notice or will be opted out of this service leaving the employer responsible for sending out the required election notices.
The ARPA, enacted on March 11, 2021, provides for a 100% premium subsidy for certain COBRA participants. At this writing, the DOL has not issued many details on how the subsidy will be administered. While we continue to monitor updates from the DOL, below is our current understanding of the tax credit and how it may affect your firm.
ARPA will subsidize the full cost of COBRA from April 1, 2021 through September 30, 2021 for employees (and their dependents) whose COBRA qualifying event was loss of coverage due to involuntary job loss or reduction in hours.
The subsidy does not apply to Individuals:
- Whose job loss was voluntary or termination due to gross misconduct.
- Who are eligible for another group health plan or Medicare.
For employers subject to federal COBRA (20 or more employees), you will need to apply to receive the tax credit directly and pay the COBRA premiums on behalf of your COBRA Participants to CalCPA Health. Employers will take the credit against Medicare payroll tax payments. The details of this process and transactions have yet to be defined by the government.
CalCPA Health will receive the subsidy directly for Employers who have CalCOBRA participants (under 20 employees). This process is also currently undefined.
Whether you are a COBRA or CalCOBRA employer, you should first determine if you have any former employees who will qualify (Assistance Eligible Individuals – AEI) for the subsidy, as employers will be required to provide a notice to those who qualify. The DOL will be issuing a model notice for employers to use as a template. CalCPA Health will notify employers once the model notice is available.
If you receive an inquiry from a former employee regarding the subsidy, you can tell them if you believe they qualify (or not) and advise that the details of the program have not been provided by the DOL but should be soon.
There are many other facets not detailed here, like election periods and coverage options, all of which will be provided by CalCPA Health directly to COBRA participants.
We hope you find this helpful and wish we could provide you with complete details, but they are just available yet.
Note: For firms self-administering COBRA, please refer to your COBRA administrator for additional information.