It is not every day that Brody and Associates sends out a Client Alert that impacts so many of you.  Part of the American Rescue Plan Act (“ARPA”) signed into law by President Biden last month calls for eligible COBRA enrollees to receive a 100% subsidy for their COBRA premiums. This subsidy, paid for by the federal government, will be provided via payroll tax credits for employers.  The subsidy began on April 1, 2021, and is to continue through September 30, 2021.It is only available to former employees who have been involuntarily terminated or suffered reduced hours.  It is not available for employees who terminate voluntarily, and the involuntary termination does not need to be related to COVID-19.

What do employers need to know?

The benefit comes with significant new notice requirements for employers to provide employees who have been terminated in the last 18 months!
This new subsidy will last for up to six months, and terminate on:

• The individual’s maximum period of COBRA coverage, typically 18 months; or
• September 1, 2021. 

The subsidy will end earlier if a former employee becomes eligible under another group health plan or Medicare.  

Brody and Associates has created a detailed “checklist” for employers to follow when attempting to comply with this new rule.  The first thing for employers to do is to compile a list of former employees who may be eligible for the subsidy.  The second thing employers should do is CLICK HERE to get a copy of the Brody and Associates checklist.  One note of relief, while most of the notice provisions are the obligation of the employer, they will likely be done by your third party health administrator or your insurer.  

This extended benefit is a substantial benefit to workers but creates quite the administrative headache for employers, their Plan Administrators and/or their insurance brokers who may be acting as de facto Plan Administrators.  Brody and Associates is well versed on the impact this new law has on employers and is able to assist should you need help.

The subject matter of COVID-19 related posts is often very technical.  It is also an evolving area of law and very fact specific.  Our goal here is to simply alert you to some of the key issues involved.  We urge you to seek competent legal counsel before applying these ideas to your specific situation.  Since March 2020, we have had a team of attorneys focusing on COVID-19 related developments and they continue to stand ready to help you with any issues involving the pandemic.