Have You Told Your Employees About COBRA Continuation Coverage Rights?

A deadline that requires employees to notify workers about changes to COBRA rights is approaching at the end of the month. SHRM explains what needs to be done.

The American Rescue Plan Act provides a six-month COBRA subsidy for those who lose health coverage due to an hours reduction or an involuntary termination. An Extended Election Period Notice must be sent out to individuals who may qualify for the subsidy, as well as their spouse and/or dependents.

A model notice has been prepared by the Department of Labor, which you can access at this link. You must also provide a summary of the assistance provisions. This document contains the forms that former employees will need to fill out to apply for the subsidy, or to say that they do not qualify. Additional forms may also be necessary. We encourage you to check out the Lexology link or speak with your labor lawyer for more details.

Failure to comply with the notice requirements can add up quickly. You may be subject to excise taxes of $100 per qualified beneficiary for each day you violate the requirements. Also, those who don’t receive notices and qualify for the subsidy can sue for damages of up to $110 per day for failure to provide the notices.

We encourage all employers to see where they need to comply ASAP. If you are using a PEO, ask them if they have provided notification or not.