(Examples added 5.18.21)Įxample 1: If a coverage period runs from September 19, 2021, through October 2, 2021, the subsidy applies for the entire period of coverage even though it ends after September 30, 2021.Įxample 2: If a coverage period began on March 28 and ended on April 10, the subsidy would be available for the period of coverage beginning on April 11. The subsidy is available until the earliest of: (1) September 30, 2021, (2) the first day the qualified beneficiary becomes eligible for coverage under any group health plan (this does not include excepted benefits, a qualified small employer HRA (QSEHRA), or a health FSA), or Medicare or (3) the date following expiration of the maximum COBRA period. How long must the subsidy be made available? The subsidy should be applied to any coverage months beginning on or after April 1, 2021. How soon must we start offering the subsidy? Employers who fail to satisfy these requirements may be subject to an excise tax under the Internal Revenue Code for as much as $100 per qualified beneficiary, but not more than $200 per family, for each day the taxpayer is out of compliance. This applies to all group health plans that are sponsored by private-sector employers and employee unions subject to the COBRA rules under ERISA, state or local governments subject to the Public Health Service Act, and group health insurance required under state mini-COBRA laws. Which plans does the premium assistance apply to? This premium assistance is generally available for continuation coverage under the Federal COBRA provisions, as well as for group health insurance coverage under comparable state continuation coverage (“mini-COBRA”) laws. It is important to note the subsidy is specific to premiums and the COBRA enrollee is responsible for any cost sharing in accordance with the terms of the plan. If a qualified beneficiary is retroactively enrolling in coverage, they are unable to use the subsidy to offset back premiums prior to April 1, 2021. The subsidy is not available for coverage months prior to April 1, 2021. Those qualified beneficiaries who meet the eligibility criteria will receive a full COBRA subsidy for coverage periods falling in the window between April 1, 2021, and September 30, 2021. What COBRA premium assistance is being offered? Clarifying guidance may continue to be issued as needed. Guidance was issued in the form of FAQs on April 7 by the Department of Labor and an additional set of FAQs were issued by the IRS on May 18, 2021. Can we expect additional guidance to be issued? New questions are labeled with the date they were added. We have updated our summary to include information from the second set of FAQs that were issued by the IRS on May 18, 2021, which provide more information around eligibility and claiming the tax credit for employers. The first set was issued by the Department of Labor on April 7, which we summarized for you in the May edition of this newsletter. Since the signing of the American Rescue Plan Act of 2021 into law in March, guidance around the COBRA premium assistance has been issued in the form of two sets of FAQs.
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