IRS publishes additional guidance on continued COBRA coverage
The IRS recently issued a notice further specifying the use of the Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage, as amended by the American Rescue Plan (ARP).
IRS Notice 2021-46 extends the 2021-31 period and identifies several parameters surrounding COBRA continuation reporting in a question-and-answer format. Before diving into the specifics, it is important to note like the ARP changes to COBRA. created Insurance coverage for selected people.
Firstly, the ARP offers people who have declined COBRA coverage or who have previously decided to receive COBRA but have discontinued it, the opportunity to sign up for coverage a second time.
In addition, certain “persons entitled to assistance” can receive 100% of the COBRA coverage for the period from April 1, 2021 to September 30, 2021. The individuals’ previous employers are responsible for paying the upfront costs. The federal government will then reimburse the employers at a later date.
The 2021-46 Communication specifically describes certain situations in which individuals are classified as “eligible” and are eligible for COBRA Reward Aid. Individuals who experience either a disability assessment, a second qualifying event, an extension under the state mini-COBRA following a reduction in working hours, or involuntary dismissal during the period in which they were originally entitled to COBRA, will receive the COBRA- Eligibility period essentially extended.
As long as the time frame for COBRA coverage falls within the time frame of April 1 and September 30, 2021 and employees experience another qualifying event, they may be eligible for COBRA Premium Assistance coverage.
The message contains the following example for clarification:
“A person who has received a general COBRA notice is involuntarily terminated and elects continued COBRA coverage with effect from October 1, 2019; the person’s 18-month COBRA extension period ends on March 31, 2021. On March 1, 2020, a disability assessment letter will be issued by the Social Security Administration stating that the person was disabled as of November 1, 2019. The determination of disability entitles the person to 29-month extended COBRA continuation protection. The individual does not notify the plan of the disability determination by April 30, 2020, which is 60 days after the date of the issuance of the disability determination letter under Section 4980B (f) (6) (C). However, according to the emergency aid notices, the person has one year and 60 days from the issue of the disability assessment letter to inform the plan of the disability to extend the COBRA continuation coverage. On April 10, 2021, the person notifies the plan of the disability and selects ongoing insurance starting April 1, 2021. Provided the person is not eligible for any other exclusive group health insurance or Medicare, the person is and has an Assistance-Eligible Person Entitlement to COBRA Premium Assistance. “
Certain nuances related to the dental, visual and medical COBRA coverage are also listed in the notice. Individuals receiving dental and vision-related coverage through COBRA continuation insurance with the right to assistance will not be able to continue receiving these benefits if they are “eligible to sign up for another exclusive group insurance or Medicare that does not provide dental or vision benefits”.
In other words, individuals cannot 1) receive medical care and eyesight through Premium COBRA assistance and 2) receive Medicare / Medicaid at the same time. The note makes it clear that it is one or the other.
Other issues related to COBRA Premium Support are detailed in the notice, including:
- The comparison of state reinsurance programs and state COBRA premium coverage
- Details for which types of employers can take advantage of the COBRA premium subsidy and under what circumstances
As a reminder, employers are required to notify eligible individuals of the option to obtain COBRA insurance in addition to paying the upfront premium cost for individuals receiving COBRA premium support.
If your organization needs assistance in meeting the COBRA Continuation Coverage requirements, contact us to learn more ACA completed. Not only do we understand the specifics of continuation coverage, but we can also help you comply with the ACA’s employer mandate.
Under the Employer mandate of the ACA, Applicable Large Employers (ALEs) are employers with 50 or more full-time employees and full-time employees. ALEs are required to:
- At least 95% of their full-time employees (and their dependents) offer Minimum Essential Coverage (MEC), whereby this coverage meets the Minimum Value (MV)
- Make sure coverage is deemed affordable based on one of the IRS-approved methods of calculating affordability
Failure to comply with these two requirements could result in penalties for your organization under Section 4980H of the Internal Revenue Code (IRC). We calculate your ACA compliance score free to see if you are currently exposed to an IRS penalty risk.
To learn more about the ACA’s responsibilities for the employer mandate, including federal and state filing deadlines, download the ACA Guide 2021 for Employers.
For information on ACA penalties, affordability percentages, key filing deadlines, steps to responding to fines, and best practices for minimizing the risk of IRS penalties, download the ACA 101 Toolkit.
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