For those of you who are required to provide COBRA, you need to keep reading! Any employee terminated after 10/1/2019 will have to be notified and can elect COBRA coverage from April through September 2021; 100% of their premiums will be covered by YOU (for now)! We’re expecting additional guidance on state continuation rules soon.
The penalties for non-compliance are STEEP, so we wanted to drop you a quick note about it so you can dig in and get the details and some reports if this applies to your company. It’s the American Rescue Plan Act of 2021 COBRA Premium Subsidy.
On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA), an additional federal effort to address employment issues related to the COVID-19 pandemic. Among other provisions, ARPA created a temporary COBRA premium subsidy and additional COBRA enrollment rights for certain employees (and their families) who lost group health plan coverage due to an involuntary termination of employment or a reduction of hours. In most cases, it is the employer/plan sponsor who is ultimately responsible for complying with the COBRA subsidy rules and who will claim tax credits through the Federal 941. Additional guidance is expected by mid-May. Be sure to check with your HR Advisor, employment lawyer, or health insurance agent about what steps you’ll need to take to ensure compliance.
The distribution of subsidy notices must begin by the end of May. Did you know that you can create a query in the 5-2-1 screen of Sage 100 Contractor to identify existing subsidy-eligible employees? As we mentioned, the non-compliance penalties are STEEP, so be sure to dig in now so you make the deadlines and have all the pieces necessary to show compliance.