I Have Management Questions For A Management Lawyer.

Please note: Sending us an email will not make you a client of our Firm. Please do not send us confidential information or sensitive materials through this form.


Brody and Associates’ Cobra Subsidy Checklist

April 13, 2021

The following checklist is intended to outline the new COBRA compliance requirements established by the American Rescue Plan Act of 2021While employers are liable for any missed notice deadlines, it is usually the third-party plan administrator that will provide the notices, unless your business does not have one. If there is no thirdparty administrator, check with your broker or insurer as they may provide this service.  In all cases, seek competent counsel to confirm you are complying with all relevant state and federal laws.    

Preliminary Question: Have any of your employees been involuntarily terminated, or had their hours reduced so as to qualify for COBRA, between now and November 2019? 

  • If no, you have no obligations under this new law.  


  • If yes, are any of them COBRA qualified beneficiaries? 
    • All qualified beneficiaries must be notified about the subsidy no later than May 31, 2021. Click here for the Model Notice provided by the Department of Labor.
      • All qualified beneficiaries who desire coverage must elect COBRA no earlier than April 1, 2021, and no later than 60 days after the employer provides the new notice of eligibility.
        • Under this situation, coverage begins on April 1, 2021.  It appears that a qualified beneficiary cannot begin COBRA coverage before April 1, but this is not certain at this point.
          • The coverage period will not extend beyond what would have been the  regular COBRA eligibility period. 
      • The notice must include (see Model Notice):
        • Forms necessary for establishing subsidy eligibility;
        • A description alternative coverage if permitted;
        • Name, address and telephone number for the plan or COBRA administrator;
        • A description of the extended election period;
        • A description of the beneficiary’s obligation to notify the plan administrator if they become eligible under another Group Health Plan or Medicare (and the penalties for failing to comply);
          • A recipient who fails to notify their former employer that they are eligible for new coverage faces a minimum penalty of $250.  If it is determined the failure to provide timely notice was intentional, then the penalty will be the greater of $250 and 110% of the subsidy amount.
        • Explanation of the right to a subsidized premium and conditions of entitlement. 
      • Those who elected COBRA coverage, but then discontinued it, are also owed a notice of eligibility.  
        • These individuals will be provided a special election period when they can elect COBRA coverage beginning on April 1 and ending 60 days after they received notice regarding the subsidy.


  • Have you decided whether to offer anyone Alternative Coverage? 
    • It is important to note that the new bill allows, but does not require, employers to permit former employees to select alternative coverage; provided that, the premium for the new plan is not higher than the employee’s previous plan.
    • Alternative Coverage means coverage the employer offered at the time an employee became COBRA eligible, but such coverage was what the employee was receiving when the employee was terminated or his/her hours were cut.   Normally, employees must continue the exact coverage he/she received when becoming COBRA eligible.  This is no longer true.  
    • Employees who want to choose an alternative medical plan must notify their employer within 90 days after the initial notice.


  • Have you determined when a Final notice must be sent to all Qualified Beneficiaries? 
    • All those receiving the subsidy must be notified of its end date no earlier than 45 days but no later than 15 before the subsidy expires. 
    • The Department of Labor has provided all these model notices and they can  be found here. 

The subject matter of COVID-19 related posts is often very technical.  It is also an evolving area of law and very fact specific.  Our goal here is to simply alert you to some of the key issues involved.  We urge you to seek competent legal counsel before applying these ideas to your specific situation.  Since March 2020, we have had a team of attorneys focusing on COVID-19 related developments and they continue to stand ready to help you with any issues involving the pandemic. 

Brody and Associates regularly advises management on complying with the latest state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.