As part of the federal American Rescue Plan Act, most employers subject to the Consolidated Omnibus Budget Reconciliation Act (COBRA) will be responsible for pre-funding and administering a temporary COBRA premium subsidy program for employees (and their dependents) who have lost coverage during the COVID-19 pandemic due to involuntary termination or reduction in hours. This Premium Assistance Program applies to Guardian’s dental and vision coverages.

Employers subject to federal COBRA (usually employers with 20 or more employees) are responsible for notifying eligible employees and paying the COBRA premiums. Employers that are not subject to federal COBRA (usually employers with less than 20 employees) may have shared responsibilities with Guardian based on state continuation laws. Read below for additional details regarding these responsibilities.

Employers subject to COBRA (usually if you have 20 or more employees)

COBRA generally requires group health plans sponsored by an employer with 20 or more employees to offer employees and their families (‘qualified beneficiaries’) the opportunity for a temporary extension of health coverage in certain instances where coverage under the group health plan would otherwise end, such as termination from employment, reduction in hours worked, death, divorce or other life events. To learn more about COBRA, please visit the Dept. of Labor website or review the attached COBRA guide for employers published by the Dept. of Labor.

For qualified beneficiaries who have lost coverage due to involuntary termination or reduction in work hours (‘Assistance Eligible Individuals’) and have elected COBRA continuation coverage, the employer must offer to pay 100% of their COBRA premiums owed from April 1, 2021 through September 30, 2021, or until they are no longer eligible for COBRA, whichever occurs first. Employers will be able to recoup the entire amount of premiums paid from the IRS through credits towards Medicare payroll taxes.  The IRS has published additional guidance on how employers may claim these credits.

For qualified beneficiaries who did not elect COBRA at the time of their qualifying event, but whose COBRA eligibility period (typically 18 months) has not yet expired, the employer will be responsible for offering them a 60-day special election period to again elect COBRA continuation coverage.

  • This special election period must also be afforded to those qualified beneficiaries that discontinued their COBRA coverage but would still be COBRA eligible if they had not.
  • For qualified beneficiaries that elect COBRA continuation coverage in this extended election period, they can elect to have their coverage apply retroactively to the date of their qualifying event (subject to applicable premium payments) or have coverage begin prospectively beginning April 1, 2021.
  • The special election period does not extend the duration for which a qualified beneficiary will be eligible for COBRA and this temporary premium subsidy will only be available for premiums owed between April 1, 2021 and September 30, 2021.

What do covered employers have to do now to comply with the COBRA Premium Assistance Program?

  • Employers will need to provide notice of this COBRA Premium Assistance Program to all Assistance Eligible Individuals who are currently on COBRA continuation under your group health plan or experience a qualifying event of involuntary termination or reduction in hours from April 1, 2021 through September 30, 2021. The Dept. of Labor has provided the attached model notice as an example.
  • On or before May 31, 2021, employers will need to provide notice of the special COBRA election period to all qualified beneficiaries who lost coverage due to involuntary termination or reduction in hours on or after November 1, 2019. The Dept. of Labor has provided the attached model notice. This notice must be accompanied by the Department of Labor’s Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021 (COBRA). Qualified beneficiaries receiving this notice will have 60 days after receipt to elect COBRA.
  • Employers will also be required to provide notice of expiration of periods of premium assistance to Assistance Eligible Individuals 15 to 45 days prior to the expiration of their premium assistance. The Dept. of Labor has provided the attached model notice.

Employers with less than 20 employees that are subject to state continuation laws

The Premium Assistance Program may also impact planholders with fewer than 20 employees who are not subject to federal COBRA and applies as follows:

  • California (CA), Rhode Island (RI), Utah (UT), and West Virginia (WV) - Guardian dental and vision coverages
  • New Hampshire (NH) and Vermont (VT) – Guardian dental coverage only
  • All other states – This Premium Assistance Program does not apply to your Guardian dental and vision coverages

State continuation requires group health plans sponsored by an employer that is not subject to COBRA (usually fewer than 20 employees) to offer employees and their families the opportunity for a temporary extension of health coverage in certain instances where coverage under the group health plan would otherwise end, such as termination from employment, or reduction in hours worked.

Under the Premium Assistance Program, Guardian must offer to pay 100% of Assistance Eligible Individuals’ state continuation coverage premiums owed from April 1, 2021 through September 30, 2021, or until they are no longer eligible for state continuation, whichever occurs first. After September 30, however, any qualified beneficiaries covered under state continuation will be responsible for paying their own premiums again.

All planholders subject to the above state continuation requirements, except those in CA and NH, will need to mail all Assistance Eligible Individuals currently on state continuation the Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021 (state continuation). Further, they will need to provide all qualified beneficiaries experiencing a qualifying event on or after April 1, 2021 Guardian’s Continuation of Coverage form (see state forms at bottom of page).

  • CA and NH planholders will only need to provide Guardian with the mailing address of all Assistance Eligible Individuals currently on state continuation and we will handle mailing the information to them.
  • Completed forms must be returned to Guardian within 60 days of receipt in order to be eligible for the fully subsidized state continuation premium.
  • This program also applies to any current employees who experience a qualifying event between April 1, 2021 and September 30, 2021, and qualify for Premium Assistance.

For more information regarding the COBRA Premium Assistance Program please refer to Department of Labor’s recently released FAQs or contact your broker.

Tools and Resources to help you better understand the COBRA Subsidy Program: