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Law360 (April 8, 2021, 2:19 p.m. EDT) – The U.S. Department of Labor has advised employers on how to offer laid-off workers the six-month subsidized health insurance approved by the Biden government’s Pandemic Aid Act.
The department on Wednesday released guidelines for notifying former employees of this type of health care and an overview of what is known as COBRA coverage.
The four model notices that provided examples of explaining the Consolidated Omnibus Budget Reconciliation Act or COBRA Subsidies to Former Employees were eagerly awaited by employers and their legal counsel since the American Rescue Plan became law on the 11th of March.
Aside from the notices, the DOL published a summary of the American Rescue Plan’s health care subsidy provisions and two frequently asked questions: one about subsidies and one about COBRA in general. COBRA offers laid-off workers the option to extend their stay on the health insurance plans of their former employers.
“The guidelines and communications released today will help educate those eligible for COBRA award assistance of the support available to them,” DOL’s acting director of benefits Ali Khawar said in a statement Wednesday .
The subsidies are available to Americans who have lost their company health insurance through involuntary job loss or working hours cut since about Fall 2019, and as long as the employee has not since qualified for another group health plan or Medicare.
Employers must notify former employees by May 31st of the subsidies, which cover 100% of the COBRA awards from April 1st to September 30th. Employers who fail to do so may be subject to an excise tax of $ 100 to $ 200 per retired worker per day of non-compliance, DOL stated in its guidelines.
The notices must include a description of the grants, an overview of their qualifications, the forms required to demonstrate eligibility and the contact information of the grant administrator.
The DOL prepared the notices in consultation with the US Treasury Department and the departments of health and human services, the agency said.
Failure to comply with COBRA’s reporting requirements poses a legal risk for employers who may complain in addition to excise duty. Well-known employers such as PepsiCo, Nestle, and Amazon are among the companies facing such lawsuits.
– Arrangement by Vincent Sherry.
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