The COBRA & Medicare Conundrum Regarding the American Rescue Plan Act
By Bonnie Burns, Consultant to California Health Advocates
Background
The federal American Rescue Plan (ARP) included a provision for federally subsidized premium assistance COBRA coverage from April 1, to September 30, 2021 for certain qualified individuals and their dependents. In some cases this coverage was retroactive for some who had lost their jobs in 2020. This benefit made COBRA coverage premium free from April 1st to September 30th of this year. It also specifically excluded from this benefit anyone who was eligible for Medicare or became eligible while receiving this COBRA benefit.
Employers and group health plans were responsible for screening out individuals who were eligible for Medicare or who became eligible while covered by COBRA under this premium assistance program.
The Department of Labor (DOL) had created a form for the sole purpose of informing an employer or group health plan of a qualified individual’s eligibility for Medicare. Qualified individuals were required to inform an employer and the group health plan if they or a covered dependent became eligible for Medicare before or during the subsidized premium period.
Federal penalties apply to anyone eligible for Medicare who signed up for this federally subsidized COBRA coverage.
Clients Unaware of Exclusion for Medicare Eligibility
CHA has recently become aware of at least one individual who took advantage of COBRA premium assistance because he didn’t know that he wasn’t eligible because of his eligibility for Medicare. None of the documents given to him by the employer, the group health plan, or the COBRA carrier informed him that a Medicare eligible individual could not enroll for the COBRA premium assistance coverage. This individual could face federal penalties for receiving free COBRA coverage while eligible for Medicare. In addition he is having difficulty reinstating his Part B coverage that he suspended while employed and had not yet activated when he enrolled in COBRA.
Federal Clarification
CHA has been working with federal legislative staff on COBRA and Medicare conflicts for several years. We contacted one of those legislative staffers to ask about federal penalties for this Medicare eligible individual, missing notification pertaining to Medicare eligibility, and whether there were any appeal rights that could be exercised when accurate information was not provided. The DOL was contacted for clarification of the law and any federal penalties that might apply. DOL’s response was “…..where an
individual was unaware that Medicare eligibility made them ineligible for premium assistance, including when an employer or COBRA administrator did not make the rules clear to qualified beneficiaries or do other screening, the individual may not be subject to a penalty.”
The substance of the reply from DOL is that when an employer, group health plan, or COBRA administrator fails to inform a qualified individual about the Medicare eligibility exclusion, and their enrollment is due to reasonable cause, and not willful neglect, it is unlikely that a $250 federal penalty would apply. But DOL points out that there is no federal mechanism to recover improperly received premium assistance or any COBRA benefits that might have been paid as a result.
Where to Go for Help
If you or someone you know found yourself in this COBRA and Medicare conundrum, contact your local Health Insurance Counseling and Advocacy Program (HICAP) for help. HICAP offers free, individual and unbiased assistance on Medicare and other health insurance related issues, including COBRA and making appeals.
