Kaiser Explains COBRA Continuation Coverage Responsibilities

The recent American Rescue Plan Act of 2021 (ARP) includes new COBRA continuation coverage election, notice, and premium assistance requirements that may affect your clients’ COBRA administration. The premium assistance will be 100% of the total cost of federal COBRA and/or Cal-COBRA health coverage and will be available for eligible individuals starting April 1, 2021 through September 30, 2021. To facilitate the new ARP requirements, there are certain actions for your clients and Kaiser Permanente to take based on how federal COBRA and/or Cal-COBRA is currently billed.

Group billed federal COBRA and Kaiser Permanente billed Cal-COBRA

The employer, or third-party administrator, administers its own federal COBRA health coverage, and Kaiser Permanente bills members directly for any Cal-COBRA mandated coverage. The employer’s Cal-COBRA population is individuals who have exhausted all 18 months of federal COBRA and qualify for Cal-COBRA.

Employer responsibilities

For an employer’s federal COBRA population, they are responsible for:

1. Sending required ARP notices to their employees
2. Paying COBRA premiums to Kaiser Permanente for assistance eligible individuals (AEIs) based on bills received
3. Claiming the payroll tax credit

For an employer’s Cal-COBRA population, they are responsible for:

1. Confirming that an individual is assistance eligible under ARP because of employment termination or a reduction of hours
2. Notifying Kaiser Permanente if an AEI has a change in eligibility

Kaiser Permanente responsibilities

Kaiser Permanente has no responsibilities for the employer’s federal COBRA population. The employer sends the ARP notice to AEIs and claims the payroll tax credit.

For an employer’s Cal-COBRA population, Kaiser Permanente will:

1. Send the ARP notices to the employer's current Cal-COBRA population and include the model summary ARP notice and request to be treated as an AEI in the Cal-COBRA information packet for newly eligible members between April 1, 2021 and September 30, 2021
2. Reach out to the employer to confirm individuals are assistance eligible
3. Issue refunds directly to AEIs if they have already paid COBRA premiums for coverage between April 1, 2021 and September 30, 2021
4. Claim the payroll tax credit for Cal-COBRA AEIs

Kaiser Permanente billed federal COBRA and Cal-COBRA

Kaiser Permanente bills members directly for federal COBRA health coverage and any Cal-COBRA mandated coverage. The employer’s Cal-COBRA population is individuals who have exhausted all 18 months of federal COBRA and qualify for Cal-COBRA.

Employer responsibilities

For an employer’s federal COBRA population, they are responsible for:

1. Sending required ARP notices to their employees
2. Informing Kaiser Permanente of AEIs by filling out the supplemental reporting template on account.kp.org
3. Paying COBRA premiums to Kaiser Permanente for AEIs based on bills received
4. Claiming the payroll tax credit

For an employer’s Cal-COBRA population, they are responsible for:

1. Confirming that an individual is assistance eligible under ARP because of employment termination or a reduction of hours
2. Notifying Kaiser Permanente if an AEI has a change in eligibility

Kaiser Permanente responsibilities

For an employer’s federal COBRA population, once Kaiser Permanente receives the supplemental reporting template from the employer, Kaiser Permanente will:

1. Transfer AEIs from direct billed to group billed
2. Issue refunds directly to AEIs if they have already paid COBRA premiums for coverage between April 1, 2021 and September 30, 2021
3. Bill the employer retroactively for AEIs for coverage beginning on or after April 1, 2021

For an employer’s Cal-COBRA population, Kaiser Permanente will:

1. Send the ARP notices to the employer’s current Cal-COBRA population and include the model summary ARP notice and request to be treated as an AEI in the Cal-COBRA information packet for newly eligible members between April 1, 2021 and September 30, 2021
2. Reach out to the employer to confirm individuals are assistance eligible
3. Issue refunds directly to AEIs if they have already paid COBRA premiums for coverage between April 1, 2021 and September 30, 2021
4. Claim the payroll tax credit for Cal-COBRA AEIs

Kaiser Permanente billed mini-COBRA

The employer has less than 20 employees and is subject to Cal-COBRA health coverage that Kaiser Permanente directly bills members.

Employer responsibilities

The employer is responsible for:

1. Confirming that an individual is assistance eligible under ARP because of employment termination or a reduction of hours
2. Notifying Kaiser Permanente if an AEI has a change in eligibility

Kaiser Permanente responsibilities

Kaiser Permanente will:

1. Send the ARP notices to the employer’s current Cal-COBRA population and include the model summary ARP notice and request to be treated as an AEI in the Cal-COBRA information packet for newly eligible members between April 1, 2021 and September 30, 2021
2. Reach out to the employer to confirm individuals are assistance eligible
3. Issue refunds directly to AEIs if they have already paid COBRA premiums for coverage between April 1, 2021 and September 30, 2021
4. Claim the payroll tax credit for Cal-COBRA AEIs

Helpful resources
Guidance and notices from the Department of Labor and Internal Revenue Service:

• COBRA premium assistance under ARP FAQs
• Model notice guidance for COBRA as required by ARP
• Model COBRA Continuation Coverage Notices
• Premium Assistance Guidance Notice 2021-31

Please have your clients contact their tax accountant or attorney for more information about ARP requirements.