Introduction
The Consolidated Omnibus Budget Reconciliation Act (COBRA) has been a fundamental piece of legislation in the United States, ensuring that employees have the option to continue their employer-sponsored health coverage after certain qualifying events. In recent times, several significant changes have been made to COBRA that impact both employers and employees. In this article, we'll explore these recent changes and discuss what employers need to know.
1. American Rescue Plan Act (ARPA)
The most substantial recent change to COBRA was introduced through the American Rescue Plan Act (ARPA), signed into law in March 2021. ARPA provided a temporary 100% subsidy for COBRA premiums for eligible individuals. This subsidy was aimed at helping those who lost their jobs or experienced reduced hours due to the COVID-19 pandemic.
Key Takeaway for Employers: Employers had to quickly adapt to the new COBRA subsidy by identifying eligible individuals, providing them with the required notices, and ensuring that the subsidy was properly administered.
2. Extended Election and Coverage Periods
Under ARPA, the election period for COBRA coverage was extended for certain individuals. It allowed those who initially declined COBRA coverage or those whose COBRA coverage had lapsed to enroll during a special extended enrollment window.
Key Takeaway for Employers: Employers needed to communicate these extended election and coverage periods to potentially eligible individuals, which required updating their COBRA notices and processes.
3. Coordination with Marketplace Coverage
ARPA also introduced coordination between COBRA continuation coverage and marketplace coverage under the Affordable Care Act (ACA). It allowed individuals to switch from COBRA coverage to marketplace coverage and vice versa under certain conditions.
Key Takeaway for Employers: Employers had to ensure that their COBRA notices were updated to inform individuals about this new option and provide accurate information regarding the timing and process for making the switch.
4. Reporting Requirements
Employers were required to report information related to the ARPA COBRA subsidy on their federal quarterly tax returns. This reporting was crucial for tracking and ensuring compliance with the subsidy provisions.
Key Takeaway for Employers: Compliance with the reporting requirements was essential to avoid penalties and ensure that the subsidy reached eligible individuals.
5. Potential Future Changes
While the ARPA COBRA subsidy was temporary, discussions about more permanent changes to COBRA are ongoing. These discussions include proposals to lower the eligibility age for Medicare, which could have implications for COBRA coverage for older workers.
Key Takeaway for Employers: Employers should stay informed about potential future changes to COBRA and be prepared to adapt to any new requirements or regulations that may arise.
Conclusion
The recent changes to COBRA brought about by the American Rescue Plan Act were significant and required employers to navigate new rules, timelines, and reporting requirements. While the ARPA subsidy was temporary, it highlighted the importance of flexibility and adaptability in managing employee benefits and compliance with changing regulations. Employers should continue to stay informed about any future developments in COBRA and be prepared to adjust their processes and communication strategies accordingly. Staying compliant with COBRA regulations not only ensures that employees have access to essential benefits but also helps employers avoid legal and financial pitfalls.
