The American Rescue Plan has introduced a subsidy for individuals who elect COBRA continuation of their health insurance because of their involuntary job loss or reduction in hours. Under this legislation, these individuals can apply for premium assistance coverage. For those who are eligible, the U.S. government will cover 100% of their COBRA premium through September 30, 2021. For employers/plan sponsors and employees/plan members, the U.S. Department of Labor (DOL) has outlined specific steps that should be taken.
Steps Employers/Plan Sponsors Should Take
According to the DOL, the COBRA premium subsidy will be reimbursed directly to an employer, plan administrator or insurance company through a COBRA premium assistance credit. To qualify, here are the steps that employers, plan administrators and insurance companies should take:
- Notify eligible employees who had a qualifying event. To qualify, individuals must meet ALL of these criteria: loss of employer-provided insurance due to involuntary job termination or reduction in hours, have elected to receive COBRA premium assistance, do not have another employer health insurance available to them, and do not qualify for Medicare.
- Notify these individuals as to when their premium assistance ends and whether they might be eligible for regular COBRA coverage or coverage under a group plan, for instance, through the Health Insurance Marketplace.
- Report the credit and number of individuals receiving assistance on their federal employment tax return (i.e., Form 941 typically) in order to claim the premium assistance credit. This enables the organization to reduce the deposits of their federal employment taxes up to the amount of the anticipated credit and to request an advance of the amount of the anticipated credit that exceeds the federal employment tax deposits.
Steps Employees/Plan Members Should Take
- Watch for a letter in the mail from their employer/plan sponsor/plan administrator informing them about electing COBRA continuation coverage.
- Complete the forms included in the letter in order to enroll. If they are already enrolled in COBRA coverage, they will receive a letter regarding their potential eligibility for the COBRA subsidy assistance.
- Return the requested forms to their employer/plan sponsor/plan administrator as directed in the letter.
By following these simple steps, employers/plan sponsors/plan administrators can help eligible employees/plan members to gain this critical financial support at a time when so many workers are struggling to meet their expenses. For more information on the COBRA Premium Subsidy, visit: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra/premium-subsidy.
