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Ask HR: “Am I responsible for paying my employees’ COBRA?”

COBRA for employees

Update April 2021: For COBRA subsidy rules under the American Rescue Plan Act click here.

In the world of human resources, nothing is off-limits. Despite it being pigeonholed as the complaint department, HR is chock-full of tricky and questionable work situations that, if handled poorly, can create potentially costly liabilities for a company.

That’s where simplicityHR’s Ask HR series comes in! From serious to seriously strange, we’re here to simplify all your burning HR questions.

To get an expert answer on COBRA coverage for employees losing health benefits, we reached out to Lori Rego, Director of Benefit Services at simplicityHR.

Ask HR: “Due to a reduction of hours some of my employees will lose their eligibility for health coverage.  Am I responsible for paying their COBRA?”

lori regoLori:  No, employers are not responsible for paying COBRA coverage of terminated employees or, in your case, employees who lost coverage because their hours were reduced.

COBRA ensures that employees have access to coverage at their own expense. An employer can require the employee to pay up to 102% of the premium for their plan (the full premium plus a 2% administration fee). Since COBRA coverage can be pricey you may consider subsidizing some of the cost, if the current situation allows. If not financially possible for your business, communicate alternative health care options that your employees might benefit from.

[Related: COBRA Rules for Employers]

You could also consider implementing changes to your group health plan. By reviewing the coverage included in your plan with your carrier, you may be able to implement changes that will help address the health insurance needs of employees impacted by COVID-19.  Keep in mind that these changes would apply to all active employees on the plan.

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This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.

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