For some employers, this subsidy may cause a short-term unexpected cash flow issue, but these funds will be returned to the employer in the quarterly payroll tax return. Federal subsidies for COBRA premiums cover the entire cost of insurance and apply from April 1, 2021 to September 30, 2021. Employers are responsible for notifying eligible individuals regarding coverage under these subsidies.

Next Steps for Employers

Due to the short time frame for notices to go out, we recommend that you begin evaluating who may be eligible as soon as possible. Plan administrators will have to amend existing COBRA notices and share a separate document with forms necessary to establish eligibility. Anyone who is eligible under these new guidelines can sign up during a 60-day Special Election Period beginning April 1, 2021.

COBRA Subsidy Eligibility

Any employee or family member who is has lost coverage for:

• Any qualifying reason between November 1, 2019, and September 31, 2021
• Any individual who has lost coverage due to a reduction of hours
• Any individual who loses their job from now until September 2021
• Any previously covered individual who is still within the 18-month eligibility period
• Any individual who did not elect COBRA when initially eligible
• Any individual who elected COBRA but subsequently dropped it

COBRA Subsidy Termination

Subsidies stop covering individuals when they come to the end of their 18-month COBRA period or September 30, 2021, whichever happens first. They also end when the individual is able to find coverage under another group health plan or become eligible for Medicare. One thing to keep in mind, since the COBRA election deadlines were extended, many former employees are likely to be within their COBRA-election period.

Future Guidance

There are many elements of these subsidies that we are still waiting on guidance. We expect that the Department of Labor will publish model COBRA notices that cover the subsidies before April 1. We believe that the Treasury Department might permit an advance credit for employers to cause as little strain on their budget as possible during this economic crisis.

We understand how complicated this topic is and if you find you require clarification, our friends at One Digital are equipped to offer advice and support to your specific situation. Feel free to contact the Forde Firm today to get answers on this and any other accounting questions you may have.

The post COBRA Changes Related to New COVID-19 Legislation appeared first on The Forde Firm.

Extensions to continue

The DOL and IRS issued guidance last year specifying that the COVID-19 outbreak period — defined as beginning March 1, 2020, and ending 60 days after the announced end of the COVID-19 national emergency — should be disregarded when calculating various deadlines under COBRA, ERISA and HIPAA’s special enrollment provisions.

The original emergency declaration would have expired on March 1, 2021, but it was recently extended. Although the agencies defined the outbreak period solely by reference to the COVID-19 national emergency, they relied on statutes allowing them to specify disregarded periods for a maximum of one year. Therefore, questions arose as to whether the outbreak period was required to end on February 28, 2021, one year after it began.

Notice 2021-01answers those questions by providing that the extensions have continued past February 28 and will be measured on a case-by-case basis. Specifically, applicable deadlines for individuals and plans that fall within the outbreak period will be extended (that is, the disregarded period will last) until the earlier of:

• One year from the date the plan or individual was first eligible for outbreak period relief, or
• The end of the outbreak period.

Once the disregarded period has ended, the timeframes that were previously disregarded will resume. Thus, the outbreak period will continue until 60 days after the end of the COVID-19 national emergency, but the maximum disregarded period for calculating relevant deadlines for any individual or plan cannot exceed one year.

Communication is necessary

The DOL advises plan sponsors to consider sending notices to participants regarding the end of the relief period, which may include reissuing or amending previous disclosures that are no longer accurate. Sponsors are also advised to notify participants who are losing coverage of other coverage options, such as through the recently announced COVID-19 special enrollment period in Health Insurance Marketplaces (commonly known as “Exchanges”).

Notice 2021-01 acknowledges that the COVID-19 pandemic and other circumstances may disrupt normal plan operations. The DOL reassures fiduciaries acting in good faith and with reasonable diligence that enforcement will emphasize compliance assistance and other relief. The notice further states that the IRS and U.S. Department of Health and Human Services concur with the guidance and its application to laws under their jurisdiction.

Challenges ahead

Plan sponsors and administrators will likely welcome this clarification but may be disappointed in its timing and in how it interprets the one-year limitation. Determinations of the disregarded period that depend on individual circumstances could create significant administrative challenges.

In addition to making case-by-case determinations, plan sponsors and administrators must quickly develop a strategy for communicating these complex rules to participants. Contact us for further information and updates.

The post The latest on COVID-related deadline extensions for health care benefits appeared first on The Forde Firm.