May 31 Deadline for New COBRA Notices Approaches for Employers

By Skoler, Abbott & Presser, P.C.

May 25, 2021

The American Rescue Plan Act (ARPA), the latest COVID-19 relief package, contained some significant changes to COBRA that employers need to comply with by May 31.  From April 1 through September 30, 2021, ARPA will provide a 100% COBRA premium subsidy to employees who qualify due to an involuntary termination or a reduction in hours.  However, employees who were terminated or had their hours reduced due to gross misconduct are not eligible.  Gross misconduct is a high standard to meet under COBRA.  Employers are advised to consult with employment counsel before denying someone coverage based on gross misconduct.  For employees who are eligible for the subsidy, employers must pay their COBRA premiums directly to the insurance carrier and can then recover the amounts paid through Medicare tax credits.  This subsidy is not limited to terminations and hours reductions related to the pandemic and employers must comply with the new law even if they are not covered by ERISA.
 
ARPA sets a deadline of May 31, 2021 for employers to issue special notices to employees, including former employees, who are eligible for the 100% COBRA subsidy as of April 1, 2021.  As discussed in our prior post, in addition to sending notices to qualifying employees who separate from employment after April 1, 2021, employers must also issue special new notices to former employees, whether they previously elected COBRA during the election period or not.  To comply with the requirement that certain former employees are offered COBRA, employers must review their records dating back to November 2019 and determine who was involuntarily terminated or had their hours reduced prior to April 1, 2021, and send them the appropriate notice.  The Department of Labor has issued model notices that can be found here.
 
The May 31 date is rapidly approaching and if an employer has not yet sent out their notices, it needs to be prioritized.  Please feel free to contact any of our attorneys to discuss any issues you might be encountering in complying with the special COBRA notice deadline.