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Employers should be busy preparing tailored COBRA continuation coverage notices for certain individuals, addressing complicated election and altered COBRA premium topics that took effect only in recent weeks. Below, we offer practical summaries and specific timing suggestions for the anxiously awaited model notices that have now been released. Notices will soon reach Americans who could receive up to six months of free COBRA coverage after having lost their active employee coverage within a certain time frame due to either an involuntary termination of employment or a reduction in hours.
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As described in our March 15, 2021 update, the American Rescue Plan Act of 2021 (the “Act”) created a temporary, 100% subsidy for assistance-eligible individuals’ premium payments for continuation health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), harkening back to past relief subsidizing COBRA continuation coverage under the American Recovery and Reinvestment Act of 2009. On April 7, 2021 the Department of Labor released four model notices (available here) employers and plan administrators may use to comply with the additional notice requirements with respect to the subsidized COBRA continuation coverage, along with a summary of the premium assistance provisions of the Act and Frequently Asked Questions ( FAQ ) about implementation of the premium assistance.
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As discussed in our prior post, under the American Rescue Plan Act of 2021, certain individuals who are eligible for COBRA coverage as a result of an involuntary termination of employment or reduction in hours may be eligible to receive a 100% subsidy for COBRA coverage for a six-month period beginning April 1, 2021 through September 30, 2021 (“COBRA Premium Subsidy”). Last week, the Department of Labor (“DOL”) released “frequently asked questions” (FAQs) and model notices related to the COBRA Premium Subsidy.
FAQs
Eligibility for Other Group Coverage
Individuals who are eligible for Medicare or other group health coverage, such as through a new employer’s plan or a spouse’s plan are not eligible for the COBRA Premium Subsidy. The FAQs make clear that eligibility for Medicaid or individual health insurance coverage through the Affordable Care Act marketplace does not disqualify an otherwise eli
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Under the American Rescue Plan Act of 2021 (ARPA), which was passed by Congress on March 11, 2021, the cost of health insurance coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) is fully subsidized from April 1, 2021 until September 30, 2021 for individuals who lost their health coverage due to an involuntarily termination or a reduction in hours. The ARPA requires employers to notify eligible individuals about the new COBRA subsidy by May 31, 2021. Eligible individuals who did not previously elect COBRA, and those who elected COBRA but stopped paying the premiums, must also be given a second election to participate. Click here to read a prior blog post by Paolo Pasicolan with more information about the COBRA subsidy under the ARPA.