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On April 7, 2021, the U.S. Department of Labor (DOL) issued eagerly anticipated guidance on administering COBRA subsidies under the American Rescue Plan Act of 2021 (ARPA). The guidance includes Frequently Asked Questions (FAQs) and various Model Notices and election forms implementing the COBRA Premium Assistance provisions under ARPA, while also announcing the launch of a page dedicated to COBRA Premium Subsidy guidance on its website.
Since ARPA was enacted, employers have been preparing to comply, albeit with many open questions. ARPA requires that full COBRA premiums be subsidized for “Assistance Eligible Individuals” for periods of coverage between April 1, 2021, through September 30, 2021. While this guidance answers important questions on the administration of the subsidies, it does not address many other details on the minds of employers. For example, this guidance does not cover important nuances such as what is an “involuntary termination” in order to qualify for subsidized coverage, how existing separation agreement commitments to subsidize COBRA should be viewed, or details on how the corresponding payroll tax credit will work.
The FAQs are largely directed to individuals and focus on how to obtain the subsidy and how subsidized coverage fits with other types of health coverage that may be available, including Marketplace, Medicaid, and individual plan coverage. We hope that employer directed guidance will follow to fill in the gaps.
Employers will be happy to know that the FAQs confirm a few points that will impact administration. First, eligibility for coverage under another group health plan, including that of a spouse’s employer, will disqualify the employee from the subsidy. Employees must certify on election forms that they are not eligible for such coverage and will notify the employer if they subsequently become eligible for coverage (individual coverage, such as through the Marketplace or Medicaid, will not disqualify an otherwise eligible individual from subsidized COBRA). Failure to do so will subject the individual to a tax penalty of $250, or if the failure is fraudulent, the greater of $250 or 110% of the premium subsidy. The availability of other coverage (which the employer may not know about) does not impact the employer’s initial obligation to identify potential Assistance Eligible Individuals and provide the required notices and election forms.
Soon after enactment, there were also questions circling about whether ARPA applied to small employer plans not subject to COBRA, but rather state “mini-COBRA” laws. The FAQs confirm that the subsidy also applies to any continuation coverage required under state mini-COBRA laws but also notes that ARPA does not change time periods for elections under State law. Further guidance would be welcome on obligations related to small insured plans. The FAQs also confirm that plans sponsored by State or local governments subject to similar continuation requirements under the Public Health Service Act are covered by the ARPA subsidies.
One area that has caused great confusion is how the right to retroactively elect COBRA coverage (to the date active coverage was lost) due to the DOL’s extended deadlines fits with this new election right. While there is more to come on this, the DOL helpfully confirmed that these are two separate rights and thankfully, the FAQs note that the extended deadlines do not apply to the 60-day notice or election periods related to the ARPA subsidies.
The most significant part of the guidance (that we knew was coming but are still happy to see sooner rather than later) are the Model Notices and election materials. The guidance package confirms that employers have until May 31, 2021, to provide the notices of the opportunity to elect subsidized coverage and individuals have 60 days following the date that notice is provided to elect subsidized coverage. Individuals can begin subsidized coverage on the date of their election, or April 1, 2021, as long as the involuntary termination or reduction in hours supporting the election right occurred before April 1, 2021. As previously noted, in no way do these timeframes extend the otherwise applicable 18-month COBRA period.
The Notices include an ARPA General Notice and COBRA Continuation Coverage Election Notice, to be provided to all individuals who will lose coverage due to any COBRA qualifying event between April 1 and September 30, 2021, and a separate Model COBRA Continuation Coverage Notice in Connection with Extended Election Periods, to be provided to anyone who may be eligible for the subsidy due to involuntary termination or reduction in hours occurring before April 1, 2021 (i.e., generally involuntary terminations or reductions in hours occurring on or after October 1, 2019).
Plans will also have to provide individuals with a Notice of Expiration of Period of Premium Assistance 15-45 days before the expiration of the subsidy — essentially explaining that subsidies will soon expire, the ability to continue unsubsidized COBRA for any period remaining under the original 18-month coverage period and describing the coverage opportunities available through other avenues such as the Marketplace or Medicaid. Employers are highly encouraged to use the DOL’s model notices without customization except where required to insert plan or employer specific information.
With the release of the model notices, employers and COBRA administrators now largely have the tools to administer this new election right. The FAQs remind us that the DOL will ensure ARPA benefits are received by eligible individuals and employers will face an excise tax for failing to comply, which can be as much as $100 per qualified beneficiary (no more than $200 per family) for each day the employer is in violation for the COBRA rules. Accordingly, employers will want to begin or continue conversations with COBRA administrators to ensure notices are timely provided to the right group of individuals.
Courtesy of Fisher & Phillips LLP
The Equal Employment Opportunity Commission (EEOC) recently rolled out a pilot program to electronically notify employers of new charges filed against them. Instead of mailing the Notice of Charge of Discrimination form through conventional means, the EEOC is rolling out a new system that will notify an employer of a pending charge and allow an employer to respond to the charge through an online portal.
This new system is catching a lot of employers by surprise, and has resulted in many questions. Fisher & Phillips has developed a list of Frequently Asked Questions to aid employers in understanding this new pilot program.
What is this new system?
The EEOC is piloting a new electronic system involving an online portal called ACT Digital. If a new Charge of Discrimination is filed against you, the EEOC will email you notice of the new Charge and invite you to download a copy through the portal.
Phase I of the project only allows employers a channel of communication with the EEOC about the Charge. Charging Parties are not yet allowed electronic access. In this first phase, upon consenting to certain terms and conditions, you are able to:
The EEOC has indicated that employers will also be able to use ACT Digital to communicate with the EEOC regarding extensions, inquiries, and other Charge-related issues. It seems this option may already be operational in some EEOC offices.
Where is the EEOC implementing ACT Digital?
The EEOC is rolling out ACT Digital in waves. The first wave began in early May 2015 and included EEOC offices in San Francisco and Charlotte. Earlier this summer, the EEOC released the program in a second wave of offices, which included Denver, Detroit, Indianapolis, and Phoenix. The EEOC’s goal is to implement ACT Digital in all of its 53 offices by October 2015.
How will we first receive notice?
The EEOC will send an email containing a Charge notification to an employer’s representative. The EEOC might obtain this email address from the Charging Party, or may obtain it from past email communications with those businesses already in the EEOC’s system.
Note that this could result in a manager or supervisor receiving notice of a Charge outside his or her own department or area. We are still checking to see if the EEOC will allow employers to proactively designate an email address where all notices to the company should be sent.
Must employers use this system?
This is the most common question we’ve received so far. The short answer is no – for now. Employers are currently not required to use ACT Digital during the pilot period of implementation. Note that if you do respond to the initial email, you may be creating an obligation to use the system going forward, thereby limiting your position with regard to how the Charge is handled.
However, the EEOC is transitioning to an entirely electronic format and, as a practical matter, all employers will likely be required to use this electronic system in the future.
What if the notification email is blocked by a
firewall or spam folder?
The EEOC’s notification procedure includes some “fail-safes” to ensure you do not miss notifications of pending Charges. For example, the EEOC may send a hard copy of the Charge if the online portal is not accessed by the employer within approximately 10 days after the notice email is sent.
Can the Charge be viewed by the public?
No, with one exception. Each Charge has a unique portal access that you will use for the life of the case. Therefore, only people with access through the unique portal address will be able to access ACT Digital to view the Charge and your Position Statement. At this time, even the Charging Party does not have access to the online portal.
The one exception – which has always been the case – is that the public may request Charge files under the Freedom of Information Act (FOIA). The EEOC has stated that it will continue to follow its current protocols and federal regulations in responding to FOIA requests (which typically do not allow for access to the Charge while the matter is pending).
Similarly, the unique portals will close after a period of time. We do not know for sure, but it is believed the portals will be deactivated 90 to 100 days after the EEOC closes the file. Because the portals expire, you should download and retain all necessary files and documents related to the Charge if they use the electronic system.
Will state human affairs commissions use ACT
At this time, the EEOC has not indicated whether state human affairs commissions will be utilizing the ACT Digital system.
What will Phase II look like?
The EEOC has released very little information about Phase II and any speculation as to what is in the pipeline is just that – speculation. With that caveat, there are a few likely next moves.
We expect the EEOC will open the portal to Charging Parties so they may file and monitor their Charges online. It is unknown, however, whether the portals will be kept separate or combined. In the future, the EEOC may also maintain a database of the employer’s prior Charges, as opposed to deactivating the portal.
What should we do immediately?
Because you could receive notice of a new Charge tomorrow, you should instruct all of your supervisors and managers today to immediately contact the HR department or in-house counsel if they get an email from the EEOC. Just as in the past you instructed them to forward on any hard copy EEOC Charge received in the mail, the same rule should apply for electronic notices.
You should take it one step further in this digital age: counsel your managers not only to forward on EEOC emails to proper company channels without responding, but also to refrain from downloading the Charge or even clicking anywhere on the email.
Phase I of the ACT Digital rollout should not drastically affect how you respond to EEOC Charges. In fact, it might make communication with the EEOC easier. As additional phases are rolled out, however, this could change. Stay tuned for more updates.
Do you want to learn more?
Fisher & Phillips LLP is hosting a free, 20-minute webinar on this subject on Thursday, September 10, 2015, at 12:00pm EST. You can register for “EEOC Goes Electronic: FAQs On EEOC’s New Electronic Pilot Program” by visiting their website (www.laborlawyers.com) and looking under the “Events” tab.
CMS recently issued a list of FAQs regarding the Federally Facilitated Marketplace (FF-SHOP aka Marketplace aka Exchange) and how they will handle the issue of tobacco rating for medical plans.
Q1: If an employee or an employee’s dependent obtaining coverage through the FF-SHOP uses tobacco, how can the employee or dependent avoid the tobacco premium rating surcharge?
A1: The FF-SHOPs will not impose the tobacco rating surcharge at the time of initial enrollment (or re-enrollment) if the employee or dependent, as applicable, agrees at the time of enrollment (or renewal or re-enrollment) to participate in a wellness program meeting the standards of section 2705 of the Public Health Service Act, such as a tobacco cessation program.
Q2: If an employee or enrollee’s dependent who is already enrolled in coverage through the FF-SHOP decides to participate in a wellness program in the middle of the plan year after initially declining to participate, will his/her premium be reduced immediately or retroactively to the time of enrollment?
A2: In the FF-SHOPs, an employee’s or employee’s dependent’s premium will be established for a period of one year upon enrollment, renewal, or re-enrollment of that employee or dependent. At that time, the enrollee or dependent can agree to participate in a wellness program to avoid the tobacco premium surcharge. If the employee or dependent does not agree at that time to participate in such a wellness program, the employee/dependent will have an opportunity to avoid the tobacco premium surcharge upon renewal or re-enrollment.