Here is important information about a COBRA premium subsidy for which you may be eligible. The American Rescue Plan Act of 2021 provides a temporary 100% COBRA premium subsidy for certain qualified beneficiaries from April 1, 2021 through September 30, 2021. And the Act extends the COBRA election period for individuals who would have been eligible for the premium subsidy but did not elect, or chose to terminate, COBRA coverage prior to April 1, 2021.
________________________________________________
Who is Eligible for the Subsidy?
The Act provides a 100% COBRA premium subsidy for the period April 1, 2021 and September 30, 2021 for “group health plan participants and their dependents who experience a loss in coverage as a result of the participant’s involuntary termination of employment or reduction in hours. To be eligible you must: (1) become eligible for and elect COBRA coverage on or after April 1, 2021 and before September 30, 2021; or (2) became eligible for COBRA before April 1, 2021 and your period of COBRA coverage (generally 18 months) must include a month between April and September 2021, even if you did not initially elect COBRA.
What Constitutes an “Involuntary” Termination or Reduction in Hours?
The Act does not define Involuntary Termination or Reduction in Hours so you should use their commonsense meaning. But termination for gross misconduct, “is not considered to be involuntary.”
Although your termination must have been involuntary to trigger eligibility for the subsidy, a reduction in hours does not need to have been involuntary to trigger eligibility. For example, a qualifying reduction in hours includes reduced hours due to changes in your employer’s hours of operations, a change from full-time to part-time status, taking a temporary leave of absence, or participation in a lawful labor strike, provided you are still an employee at the time your hours are reduced.
How Many Months Does the Subsidy Cover?
The subsidy will continue through September 30, 2021 but will end earlier if your regular period of COBRA coverage ends or you become eligible for coverage under any other group health plan or Medicare before that date. Anyone who becomes eligible for other coverage must notify their plan of that fact and failure to do so will result in monetary penalties on that person unless you can show that the failure was due to reasonable cause.
