00:00

cobra compliance can be difficult

00:03

especially if you're handling it

00:05

yourself

00:06

and now it's even more complicated

00:08

thanks to recent stimulus bill changes

00:10

that

00:10

implemented a 100 free cobra subsidy

00:14

for eligible employees and employers

00:17

in this episode of hr party one we'll

00:19

talk through the ins and outs

00:21

of this important component of a health

00:23

care law that's designed to help out

00:24

employees during the pandemic

00:26

and i highly recommend watching until

00:28

the end because we'll talk through what

00:30

you need to know about how your current

00:32

or former employees can get cobra for

00:34

free and how you can help

00:37

we'll discuss what is the cobra subsidy

00:40

that just became law

00:42

how eligibility works for the new cobra

00:44

subsidy

00:46

cobra subsidy employee notice

00:47

requirements

00:49

and who can help employers with cobra

00:51

subsidies

00:52

let's get started the new biden

00:54

administration hopes to make it easier

00:55

for people to access healthcare during

00:57

the pandemic

00:58

with the march 2021 passage of arpa

01:01

the administration stepped in to

01:03

subsidize the full cost of cobra

01:04

coverage through the end of september

01:06

2021 but before we dig in to how the

01:09

subsidy works let's discuss

01:11

why they decided to pass it in the first

01:12

place when a person's employed

01:15

a portion of their health insurance

01:16

premium is often paid for by the

01:18

employer

01:19

if someone's laid off or has their hours

01:21

cut as many millions of americans

01:23

experienced

01:24

during the pandemic they can decide to

01:26

opt to continue

01:27

coverage thanks to the consolidated

01:30

omnibus budget reconciliation act

01:32

also known as cobra and while the

01:34

coverage remains the same the person who

01:35

elects cobra is typically responsible

01:37

for the full

01:38

cost of the health insurance premium

01:40

each month

01:41

normally the amount charged for cobra

01:43

coverage can't exceed 102

01:45

of the cost of the plan but temporary

01:47

health insurance is often more difficult

01:48

to buy without a steady income

01:50

and costs can reach nearly 500 per

01:53

person per month

01:54

the new cobra subsidy is designed to

01:56

provide key assistance for struggling

01:58

workers to access health coverage for

02:00

free so how does it work employees who

02:04

involuntarily lost their health

02:06

insurance benefits any time after

02:07

november 1

02:08

2019 may be eligible for up to six

02:11

months of free cobra from april 1st of

02:14

this year through september 30th

02:16

these individuals are called assistance

02:18

eligible individuals or aeis

02:21

employers must notify qualifying

02:23

employees about the cobra subsidy

02:25

while employees can elect cobra coverage

02:26

within 63 days of becoming eligible

02:29

once they elect the coverage they're

02:31

covered

02:32

from the employee's perspective

02:33

everything else happens on the back end

02:35

behind the curtains

02:38

if employers comply with this and in

02:40

certain notice requirements which we'll

02:42

cover in a few minutes

02:43

they'll qualify to receive a credit to

02:44

pay for the cobra subsidies

02:46

the government then reimburses the

02:48

employer using a payroll

02:50

tax credit when they file form 941 for

02:53

their quarterly taxes

02:54

to recap i've broken this down into a

02:57

graphic that explains how cobra

02:58

normally works and how it works now

03:01

here's how cobra normally works an

03:03

employee becomes eligible for cobra

03:05

usually as a result of termination or

03:07

reduction in hours

03:09

the employer notifies all qualifying

03:11

employees about cobra coverage

03:13

and this must be done within 60 days of

03:14

the employee's qualifying event

03:17

then the employee elects cobra benefits

03:19

and this needs to happen within 63 days

03:21

of becoming eligible

03:22

the employee pays the premium and again

03:25

this is up to 102

03:26

of the actual cost and is paid each

03:28

month to the cobra administrator

03:30

and then the cobra administrator remits

03:32

payment to the employer

03:34

and the employer in turn pays the

03:35

carrier and here's how cobra is going to

03:38

03:41

an employee becomes eligible for cobra

03:43

again usually as a result of termination

03:45

or reduction in

03:46

hours then the employer notifies all

03:49

qualifying employees about cobra

03:51

coverage and the cobra subsidy

03:54

this must be done within 60 days of the

03:56

employee's qualifying event

03:58

and subsidy information must be

03:59

communicated beginning april 1st

04:02

the employee then elects cobra benefits

04:05

and this needs to happen within 63 days

04:06

of becoming

04:07

eligible just like before and then the

04:10

employer pays the carrier this covers

04:11

the cost of the health care premium

04:13

and the government reimburses the

04:14

employer this repayment arrives

04:18

via payroll tax credit but only when the

04:20

organization files form 941

04:22

on its quarterly taxes you've probably

04:25

figured out by now

04:26

that this is going to be a pretty

04:27

compliance heavy episode

04:29

that's part of the job sometimes but the

04:31

good news is that the 2021 cobra subsidy

04:33

is likely to impact your team and your

04:36

organization in some

04:37

very tangible ways here's how

04:40

for employees this provision can help

04:43

qualifying individuals maintain health

04:44

plan coverage

04:45

in some cases you may even have people

04:47

still on staff who

04:48

qualify for the coverage for example if

04:50

their hours are cut

04:52

being able to stay on a health plan is

04:54

especially important during a pandemic

04:56

but it also alleviates a lot of the

04:58

stress that comes with figuring out how

04:59

to pay for medical bills

05:01

this option gives workers an essential

05:03

lifeline that can help keep employees on

05:05

your staff

05:05

who would otherwise be forced to look

05:07

for another job

05:09

it also helps keep people productive and

05:10

engaged with their work

05:13

for employers laid off employees would

05:15

still have access to the organization's

05:17

health plan at no cost to the employer

05:19

or the worker however as we just covered

05:21

you might initially have some

05:23

administrative difficulties

05:24

when administering or handling the

05:26

subsidy all right

05:28

so we've hammered out the details now

05:30

let's dig into the nuts and bolts a

05:32

little bit more

05:34

first let's talk about eligibility any

05:36

employee who was terminated or had their

05:38

hours cut

05:39

involuntarily qualifies and this means

05:42

they didn't quit

05:43

also they weren't fired for gross

05:45

misconduct

05:46

within this group of employees there are

05:48

three categories of people

05:49

who are eligible anyone currently on

05:52

cobra

05:54

employees who become eligible for cobra

05:55

between april 1st 2021 and september 30

05:58

2021 and anyone who became eligible for

06:01

cobra after november 1st

06:02

2019 but waived coverage immediately or

06:05

before their cobra eligibility period

06:07

which is usually 18 months

06:09

ended employees who are initially

06:11

eligible for the subsidy

06:13

will lose their eligibility under the

06:14

following circumstances

06:16

they become eligible for health

06:18

insurance under a new plan

06:20

they reach the date in which their cobra

06:22

coverage normally expires

06:23

for example their 18 months ends in july

06:26

because this is

06:27

complicated stuff let's just talk

06:29

through an example just to make sure

06:31

we're on the same page here's susan

06:35

an assistance eligible individual and

06:37

she elects cobra coverage due to her

06:38

involuntary

06:39

termination from employment she elects

06:42

coverage for herself and

06:43

all of her family members who were

06:44

covered under the plan on the day before

06:46

the qualifying event

06:47

and that includes her two dependent

06:49

children and her domestic partner

06:51

susan and her family members are not

06:53

eligible for other group health coverage

06:55

or medicare

06:56

under the terms of the plan cobra

06:58

coverage for an employee plus two

07:00

or more dependents costs 800 per month

07:02

as a result susan would be entitled to

07:04

the arpa cobra premium subsidy for the

07:06

full 800

07:07

per month and her former employer may

07:10

claim the payroll tax credit for the

07:11

full 800

07:14

okay now let's go over notice

07:15

requirements

07:17

beginning april 1st employers must

07:19

satisfy certain employee notice

07:20

requirements concerning the subsidy

07:22

to receive the employer credit including

07:25

that they must be delivered to anyone

07:26

who qualifies for the subsidy by may

07:28

31st

07:30

here's what every notice should include

07:32

the forms necessary for establishing

07:34

eligibility for premium assistance

07:36

the name address and telephone number

07:38

necessary to contact the plan

07:39

administrator

07:40

and any other person with relevant

07:41

information regarding the premium

07:42

subsidy

07:43

a description of the special 60-day

07:44

election period

07:46

a description of the qualified

07:47

beneficiary's obligation to inform the

07:49

plan administrator

07:50

if the qualified beneficiary becomes

07:52

eligible for disqualifying coverage

07:54

a description displayed in a prominent

07:56

manner of a qualified beneficiary's

07:58

right to a subsidized premium

08:00

and any conditions on entitlement to the

08:02

subsidized premium

08:04

a description of the qualified

08:05

beneficiaries option to enroll in

08:06

different coverage

08:07

if permitted by the employer employers

08:09

should review the sample notification

08:11

letters provided by the department of

08:12

labor

08:13

to use when communicating these options

08:15

to their current future and past

08:16

employees who qualify for the subsidy

08:18

the dol has promised to issue model

08:21

notices

08:21

by april 30th so if they're not already

08:24

available

08:25

they will be soon if you're working in a

08:27

small or mid-sized organization

08:29

you're likely responsible for keeping

08:31

track of all the updates we've seen in

08:33

the past several weeks

08:34

you're not alone here's who can help you

08:37

out

08:38

if you're an employer that administers

08:39

cobra on your own without a third party

08:41

administrator

08:42

you'll want to closely follow any new

08:43

guidelines released by the department of

08:45

labor

08:46

you may also be able to rely on guidance

08:48

from a licensed benefits broker

08:49

attorney or your cpa if you are working

08:53

with the cobra

08:54

tpa they'll help you stay compliant

08:57

and they've likely already contacted you

08:58

about this subsidy

09:00

if they haven't you're going to want to

09:01

reach out to them as soon as possible

09:03

they'll most likely need your help when

09:05

evaluating and establishing

09:07

an employee's cause for termination but

09:09

if you're using a

09:11

human resource information system in

09:12

hris this should be really easy to pull

09:15

alpine is the exclusive cobra tpa for

09:18

bernie portal

09:19

and the alpine team has been on top of

09:20

these updates since the stimulus bill

09:22

first passed in march

09:24

this is the kind of service that's

09:25

needed during times like these alpine's

09:27

worked with

09:28

all of its employer and broker clients

09:29

to make sure any current future or past

09:32

cobra member eligible for the subsidy

09:33

knows how to take advantage of it

09:35

a partner like this can be viewed as an

09:36

extension of your own hr efforts

09:39

by helping your team remain compliant

09:41

with the latest stimulus legislation

09:42

you can worry less about the nuts and

09:44

bolts and focus your efforts

09:46

on strategic projects that keep your

09:48

company culture strong and elevate your

09:50

role

09:51

and that's what hr party one is all

09:53

about we just

09:55

covered a lot if you're a visual learner

09:57

alpine put together a slideshow that

09:59

recaps the big cobra subsidy details

10:01

which i've included in the episode

10:02

description so your homework this time

10:04

around

10:05

is to start by populating a list of

10:07

employees who were terminated

10:08

involuntarily during the eligibility

10:10

time frame

10:11

remember it includes current past and

10:13

future employees

10:15

then reach out to your cobra tpa if you

10:17

have one

10:18

contact your broker your organization's

10:20

attorney or your cpa

10:22

get in touch reach out these contacts

10:25

will be invaluable resources as you

10:26

begin to wade through the compliance

10:28

complexities

10:28

found in this subsidy also hey be

10:32

sure to keep an eye out for future

10:33

updates and possible extensions

10:35

congress has extended past coronavirus

10:37

programs like the ppp

10:39

so it's not completely out of the realm

10:40

of possibility that it could do the same

10:42

for the cobra subsidy

10:43

if it does we'll cover the changes here

10:46

or on the bernie portal blog which is

10:48

also in the episode description for easy

10:49

access

10:51

as always remember your job is as

10:54

strategic as you make it

11:01

that's all i've got this time if you

11:02

like what you saw consider subscribing

11:04

to our hr party one channel

11:06

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11:07

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11:09

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11:09

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