The Department of Labor (DOL) just issued several COBRA notices you may need to give employees under the American Rescue Plan Act (ARPA).
Check out the two notices you, as employer, may be required to provide:
- Model ARP General Notice and COBRA Continuation Coverage Election Notice, and
- Notice of Expiration of Period of Premium Assistance.
Within 60 days you’ll need to send out a notice to each employee who lost healthcare coverage due to an involuntary termination or involuntary reduction in hours so they know they’re eligible.
In return, your company will receive 100% of employees’ COBRA premiums as payroll tax credits. That’s since under the ARPA, people can continue their COBRA coverage without paying any premiums.
Quarters 2 and 3 of premium assistance
During its April Payroll Industry Call, the IRS gave details about the law that will help your Payroll team comply.
Employers that provide continuation coverage under the ARPA can claim a payroll tax credit on Form 941 or use Form 7200 to obtain an advance credit. That’s how the federal government will reimburse employers. (Individuals will pay nothing for this health coverage.)
You may have employees who first become eligible for the premium assistance during the two-quarter window: from April 1, 2021, to Sept. 30. 2021.
Or the clock may have already started ticking on the 18 months of COBRA continuation coverage. IRS explained that:
- individuals who previously elected COBRA at the time of their COVID-related qualifying event are eligible, and
- the law lets folks opt in or back in now – even as the clock may soon stop ticking on their 18 months.
Premium assistance might end for an individual before the 18 months concludes, the IRS cautioned.
That’d be the case if someone becomes eligible to participate in another employer-provided health plan (e.g., through a spouse or due to obtaining a new job).
IRS made clear you should take into account eligibility for, as opposed to participation in, another plan.