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When ending your employees’ benefits in the insurance system, be sure to consider whether the employee would be eligible for the COBRA subsidy.
The COBRA subsidy is available to individuals from April 1 through September 30. 2021. This means that employees terminating employer-sponsored coverage between March 31 and August 31, 2021, may be eligible for the COBRA subsidy if they meet certain eligibility criteria (i.e., they are federally eligible for COBRA during the subsidy, AND they lost group health coverage to involuntarily termination OR a reduction in hours, AND they do not have access to other group health coverage or Medicare).
The reason code entered in the insurance system helps HCA staff determine if the employee is eligible for the subsidy when processing their COBRA enrollment forms.
Reason code 56 was specifically created to identify COBRA Subsidy eligible individuals. Use reason code 56 when an employee experiences one of the following initial qualifying events:
- A reduction in hours that results in the loss of eligibility for the employer contribution for benefits. The reduction in hours may be involuntary (employer-initiated) or voluntary (employee-initiated).
OR
- An employer-initiated termination.
- Examples include, but are not limited to layoff, unpaid leave, disability retirement, and employer ending employment for cause. Also included are employees who choose to retire or terminate due to layoff, termination, or a reduction in hours.
By using the correct termination code in the insurance system, the individuals and each enrolled dependent on the account will receive a COBRA packet with the information needed to apply.
Employer groups:
If Outreach and Training keys your employees’ data in the insurance system, please indicate on the Insurance Eligibility Adjustment form if the employee would be eligible for the COBRA subsidy. This will help the Outreach and Training staff enter the correct termination code in the insurance system.
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