Mini-COBRA Premium Subsidy

Posted by BAS - 22 July, 2021


The American Rescue Plan Act provides a 100% COBRA premium subsidy between April 1, 2021 and September 30, 2021 for certain individuals entitled to COBRA or state mini-COBRA due to reduction of hours or involuntary termination of employment. To be eligible for the subsidy, the qualified beneficiary must elect continuation coverage under Federal COBRA or state mini-COBRA requirements; have a qualifying event that is a reduction in hours or involuntary termination of employment; elect to be considered an assistance-eligible individual; and not be eligible for other group health coverage or Medicare.

Employers that follow Federal COBRA are eligible for a tax credit in the amount of the premium paid for coverage (including the 2% administrative fee). Employers that follow state mini-COBRA rules do not receive the tax credit. The insurer of a state mini-COBRA plan is supposed to provide the subsidized mini-COBRA coverage at no additional cost to the employer.

Each insurer will have its own method for covering the cost of mini-COBRA coverage for an assistance-eligible individual. Some insurers will be providing a manual credit on the employer’s premium invoice provided the employer can show proof of the individual’s election to be treated as eligible for assistance.

Small employers should understand how their insurer will be handling the premium assistance reimbursement and provide requested information timely.

Topics: COBRA, HR & Benefits Compliance, HR & Benefit Plans, HR & Benefits News

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