ThinkAdvisor Discusses the End of Federal COBRA Subsidies Based on Venable Client Alert

2 min

On September 17, 2021, ThinkAdvisor provided commentary on the end of a temporary federal health insurance premium subsidy program based on a Venable alert by Juliana RenoLisa Tavares, and Ryann Aaron.

According to the article, a section in the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) gives many group health plan enrollees the right to pay to keep their employer-sponsored health coverage in place when they leave their employers. The American Rescue Plan Act of 2021 (ARPA) provided billions of dollars in aid to help displaced workers keep their usual employer-sponsored health benefits in place during the COVID-19 pandemic by paying 100% of the premiums for COBRA health benefits continuation coverage.

Employers could choose whether to offer the ARPA subsidy for COBRA payments to departing workers. The employers that offered access to the temporary COBRA subsidy were supposed to notify the former employees of the end of the subsidy by September 15, according to the client alert.

The alert noted that regulators have not yet explained how employers are supposed to handle some common subsidy scenarios, such as when a qualifying event occurred in August 2021, making the expiration notice due before the individual received a COBRA election notice.

“The IRS has not provided specific guidance regarding these scenarios,” Venable wrote. “We are hopeful that the IRS will not impose penalties if a plan administrator provides the expiration notice at a time that is reasonable under the circumstances.”

Click here to access the article.