Should Congressional Democrats get a COVID Stimulus Package across the finish line by their self-imposed deadline of mid-March and over to President Biden’s desk, it will include an enhanced health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.
COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.
Under the proposed new provision, COBRA enrollees will only be required to pay 15% of the cost of their COBRA premiums, and the Federal government will pick up the remaining 85% of the premium. These COBRA subsidies are available beginning the first day of the first month after enactment of the COVID Stimulus Package.
According to the Employers Association of New Jersey, if a person happens to already be eligible for COBRA prior to the enactment of the COVID Stimulus Package - because, for example, their employer terminated them in 2020 - this former employee will also be eligible for a COBRA subsidy if they elect COBRA coverage.
In line with this policy goal of allowing employees who were eligible for COBRA prior to the enactment of the COVID Stimulus Package to access the COBRA subsidies, employers are required to send to all of their involuntarily terminated former employees a notice explaining to these former employees that they may now be eligible to receive the COBRA subsidies if they elect COBRA.
According to the Association, employers must send this particular notice to their former employees within 60 days after the first day of the first month after enactment of the COVID Stimulus Package.