COVID-19 and COBRA Continuation…New Proposals from Biden Administration
Before the end of this month (February 2021), we are expecting Congress to pass additional COVID-19 legislation that (as it’s written today) provides qualified individuals with up to an 85% COBRA subsidy, through September 30, 2021. OCA has already begun putting processes in place to accommodate the next leg of COBRA changes. The COBRA subsidy is a much-needed relief for many, especially in our backyard with NJ and NY ranking among the top 10 in unemployment.
Highlights of Proposed COBRA Subsidy
- Subsidy is 85% of the COBRA premium (COBRA participant pays 15%). It is expected that the employer will pay the remainder subject to an employment tax credit.
- Subsidy begins the first of the month after enactment- (March 1st assuming enactment is in February 2021).
- Subsidy lasts through September 30, 2021.
- COBRA event must be an involuntary termination or reduction in hours (voluntary changes do not qualify).
- Cannot receive the subsidy if eligible for coverage under another group health plan or Medicare.
- Special Notice to eligible individuals must go out within 60 days of March 1st (April 30th) assuming enactment is in February.
- The eligible individuals have 60 days to elect coverage after receipt of the Special Notice with the subsidy back to March 1st (assuming enactment in February).
- Notice on the expiration of the subsidy and the right to continue COBRA paying the full premium also required.
While system changes are fairly easy to accommodate, we do foresee administrative hurdles as it relates to the communication of the proposed subsidies. Specifically, the newly required notices, the need to identify who is/isn’t qualified, accommodating diverse start/stop dates, etc. We’re actively reviewing the best practices on how to work through these challenges and create a clear communication path between OCA and our partners and clients. During this time, we want to make sure we’re working together as we imagine a significant increase in volume/questions, especially over the next 45-60 days.
Again, we’re here to help in any way we can. We want you and your team to know we’re on top of this and set expectations for what the next couple of months could look like. From what we are being told, this proposed legislation is not a matter of “if” but “when.” Once finalized, we will be back to you again with additional information and resources. Until then, if you have any questions or concerns, please don’t hesitate to reach out!