New COBRA premium subsidy

Understanding subsidy for COBRA coverage.

The American Rescue Plan Act of 2021 includes a provision for a COBRA continuation coverage premium subsidy of 100% for individuals and families who experienced involuntary job loss or a reduction in hours of work leading to a loss in coverage. Below is important information you need to know.*


Who is eligible?

Subsidy will be available to eligible individuals from April 1, 2021 through September 30, 2021. Individuals and their beneficiaries who have lost their employer-sponsored health coverage due to involuntary termination or reduction in work hours are eligible. Additional eligibility requirements include:

  • Must elect COBRA continuation coverage.
  • Must not be eligible for Medicare.
  • Must not be eligible for coverage under any other group health plan, such as a plan sponsored by a new employer or a spouse’s employer.
  • For Cal-COBRA, individuals must reside in Sharp Health Plan’s service area and the former employer must still be contracted with Sharp Health Plan.

Eligibility dates and maximum duration of COBRA eligibility is determined by the original qualifying event date. Subsidy eligibility does not extend or alter the original maximum period of COBRA eligibility.

What do employers need to do?

To ensure compliance and avoid penalties, please:

  • Review all guidance and required actions from the Department of Labor (DOL)
  • Download and review DOL model notices and requirements
  • Share information about the premium subsidy with eligible individuals by May 31, 2021
  • Verify employee subsidy eligibility when asked by Sharp Health Plan
  • Review the roles and responsibilities for employers and Sharp Health Plan below

Roles and responsibilities for employers and Sharp Health Plan

Roles and ResponsibilitiesPremium Bill COBRA – NewPremium Bill COBRA – ExistingDirect Bill COBRA – NewDirect Bill
COBRA – Existing
Issue election noticeEmployerN/AEmployerN/A
Identify employees who were involuntarily termed (not gross misconduct) or reduction in hoursEmployerEmployerEmployerEmployer
Issue premium subsidy eligibility noticeEmployerEmployerEmployerEmployer
Document / confirm subsidy electionEmployerEmployerEmployer, then notify SHPEmployer, then notify SHP
Pay premium for April – September 2021EmployerEmployerEmployerEmployer
Refund premium paid by enrollee for April – September 2021EmployerEmployerSHP or EmployerSHP or Employer
Issue notice of end of subsidyEmployerEmployerEmployerEmployer
Request reimbursement of subsidy through tax creditEmployerEmployerEmployerEmployer

“SHP” stands for “Sharp Health Plan”

Note: Cal-COBRA continuation coverage is not reflected above because Cal-COBRA is administered by the Plan.

Questions?

Please read our COBRA subsidy FAQ for more information, or read our COBRA subsidy FAQ for more information, or contact your dedicated account management executive with questions. You can also visit the Department of Labor’s website for additional guidance.


* This material is intended for general information purposes only and does not constitute legal advice. For inquiries regarding your responsibilities under the American Rescue Plan Act, please consult your legal counsel or benefits advisor.