The
U.S. Department of Labor has told employers how to offer laid-off workers the six months of subsidized health insurance authorized by the Biden administration's pandemic relief bill.
The department released guidance Wednesday on notifying ex-employees of this type of health care assistance and an overview of what is called COBRA coverage.
The four model notices, which provide examples of how to explain the Consolidated Omnibus Budget Reconciliation Act or COBRA subsidies to ex-workers, had been
hotly anticipated by employers and their legal advisers since the American Rescue Plan
became law on March 11.
Aside from the notices, the DOL published a summary of the American Rescue Plan's health care subsidy provisions and two sets of frequently asked questions: one about the subsidies and the other about COBRA in general. COBRA gives laid-off workers the chance to extend their stays on their former employers' health insurance plans.
"The guidance and notices issued today will help to inform individuals entitled to the COBRA premium assistance about the assistance available to them," the acting head of DOL's benefits unit, Ali Khawar, said in a statement Wednesday.
The subsidies are available to Americans who have lost their company-provided health insurance through an involuntary job loss or reduction of hours since roughly the fall of 2019, as long as the worker hasn't qualified for another group health plan or Medicare since then.
Employers must notify ex-workers of the subsidies, which cover 100% of COBRA premiums from April 1 to Sept. 30, by May 31. Employers that fail to do so may be subject to an excise tax of $100 to $200 per ex-worker per day of noncompliance, DOL indicated in its guidance.
The notices must include a description of the subsidies, a rundown of how to qualify for them, the forms required to prove eligibility and the subsidy administrator's contact information, among other pieces of information.
The DOL produced the notices in consultation with the U.S. Treasury and Health and Human Services departments, the agency said.
Failure to comply with COBRA's notification requirements carries legal risk for employers, which face the possibility of
lawsuits in addition to the excise tax. Big-name employers such as
PepsiCo,
Nestle and
Amazon are among the companies that have faced such suits.
--Editing by Vincent Sherry.
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