Who Qualifies?
Many COBRA TPAs do not know whether employee terminations were involuntary or voluntary, and often that is not data they capture. It is up to absolutely every employer subject to COBRA (or State Continuation for that matter) to go back and audit to identify any involuntary terminations, and any reductions in hours – both voluntary and involuntary.
How Far Back Do I Need to Audit?
The employer should audit all the way back to October 2019, for a November 1, 2019 COBRA effective date. Individuals who were first eligible for COBRA on November 1, 2019 would have their 18th month of COBRA fall in April of 2021, which is the first month of the new subsidies.
What Will the TPAs Need from Me?
The TPAs will probably be providing the Notices to AEIs, but will likely require employers to identify who the AEIs are. Please check with your TPA if they have not notified you. If an employer does not have a TPA for your COBRA administration, the employer must identify AEIs and send out the notices themselves.
A Few Other Things to Remember:
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AEIs do not have to have been enrolled on COBRA for any of the time up until the subsidy starts. ARPA created a new election window and they can elect prospectively starting April 1, 2021.
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AEIs do not have to elect retroactively to their original COBRA eligibility date, or pay any back premiums.
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If an AEI is eligible for a new employer’s plan, or a spouse’s plan, or Medicare, they will not be eligible for this COBRA assistance.
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Premiums for State Continuation in Colorado will be paid by the carriers and they will claim the tax credit as well, so smaller employers not subject to COBRA do not have to deal with those logistics. They WILL still likely need to audit to let the carriers know who the AEIs are that they must notify.
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In most instances, domestic partners will not qualify as AEIs and the COBRA subsidies will not apply to them, since the IRS does not recognize them as COBRA-eligible.
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Dental and Vision premiums will also be eligible for assistance, as will Health Reimbursement Arrangements (HSAs) and plans other than Flexible Spending Accounts (FSAs).
We recommend to employers that haven’t begun to track AEIs back to October 2019 to start ASAP. If you need further guidance on these matters, please contact your Fall River Client Manager, or reference Alera's COBRA Subsidy Quick Facts or Whitepaper.
