Client Alerts archive for the ‘COBRA’ category
Posted by Todd McDonald on June 21, 2010
June 16 Update: Legislation that would provide an extension of federal extended unemployment benefits, which have expired, was rejected by the Senate today. Democrats are going to attempt to change the legislation in the hopes of coming up with a bill that will pass.
In the past, the extensions have been retroactive, so, hopefully, that will be the case this time if an extension is approved. As of now, the measure is a scaled down version that extends filing deadlines through November and does not include the COBRA subsidy.
In addition, the legislation does not include a Tier 5 unemployment extension that would provide additional weeks of unemployment for the 99ers – the unemployed workers who have exhausted all unemployment benefits.
For the current status of unemployment, check with your State Unemployment Office web site for details on who qualifies and when and how benefits will be paid, or contact us for more information.
Posted by Todd McDonald on May 11, 2010
Effective May 5, 2010, employers that have group comprehensive health care plans must permit employees, their spouses, and employees’ dependents to elect to continue plan coverage for up to 30 months when certain qualifying events occur and must provide notice of such right by July 5, 2010, to certain employees, their spouses, and employees dependents.
The American Recovery and Reinvestment Act of 2009 (ARRA), as amended, provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35% of their COBRA premiums and the remaining 65% is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee’s employment. The involuntary termination must generally occur during the period that began September 1, 2008 and ends on May 31, 2010. (An involuntary termination of employment that occurs on or after March 2, 2010 but by May 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through May 31, 2010 is also a qualifying event for purposes of ARRA.) The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months. See Continuing Extension Act of 2010.
This legislation applies to laid-off workers who are covered by Federal COBRA (businesses with 20 or more employees) as well as those covered under Connecticut’s state continuation law (businesses with less than 20 employees). The Connecticut Legislature recently enacted Public Act 10-1, which ensured that this new COBRA subsidy extension applied to small group business with less than 20 employees covered under Connecticut’s state continuation law.
Click below for information on this new extension.
Special Information for Connecticut Small Employer Groups – Subject to state continuation (Mini-COBRA)
There are no updates for the following jurisdictions:
- Massachusetts
- New Hampshire
- Rhode Island
Feel free to call us for information or to request assistance in looking into these state-by-state issues.
Posted by Todd McDonald on April 19, 2010
On April 15, 2010, the President signed into law the Continuing Extension Act of 2010 (HR 4851). Among other provisions, this law once again extends the COBRA subsidy eligibility period under ARRA, this time through May 31, 2010.
As with ARRA, the changes affect continuation coverage offered under COBRA and any comparable state law. Like its COBRA predecessors, this law takes immediate effect and is retroactive to April 1, 2010.
The law makes the following changes:
- New Sunset Date: The COBRA subsidy eligibility period (for Qualifying Events on or after September 1, 2008) now ends on May 31, 2010. This period had expired on March 31, 2010. As a refresher, the subsidy is a 65 percent discount off the regular COBRA premium for up to 15 months. Only Assistance Eligible Individuals (AEIs) qualify for the subsidy.
- Eligible Qualifying Events: As before, two types of Qualifying Events are subsidy eligible. The first one is an involuntary termination of employment. The second one is a reduction in hours followed by an involuntary termination of employment if that involuntary termination occurs on or after March 2, 2010, and on or before May 31, 2010. The new law does not change the length of the COBRA maximum coverage period. It is still based on the original reduction in hours Qualifying Event date. Also, the subsidy period (up to 15 months) is unchanged.
Aisling Partners is taking several steps to ensure COBRA compliance for its client base.
This is a scenario that is likely to continue month by month for the remainder of this year until and unless HR 4213 (amended by Senate Amendment 3336) is passed. This bill has been passed by the Senate and is pending in the House. It would extend the subsidy eligibility period through the end of 2010.
Posted by Todd McDonald on March 5, 2010
Late on March 2, 2010, the President signed into law the Temporary Extension Act of 2010 (HR 4691). Among other provisions, this law extends the COBRA subsidy eligibility period under ARRA to March 31, 2010.
After much debate, the Senate passed the bill by a 78-19 vote before the bill went to the President. As with ARRA, the changes affect continuation coverage offered under COBRA and any comparable state law. As with its COBRA predecessors, this law takes immediate effect.
Click here to download the temporary extension.
The law makes the following changes:
- New Sunset Date: It extends the COBRA subsidy eligibility period (for Qualifying Events on or after September 1, 2008) through March 31, 2010. This period had expired on February 28, 2010. Recall that the subsidy is a 65 percent discount off the regular COBRA premium for up to 15 months. Only Assistance Eligible Individuals (AEIs) qualify for the subsidy.
- Expanded Eligibility: The law provides the subsidy for an additional group of Qualified Beneficiaries. The ARRA subsidy is now available to individuals who experience a reduction in hours followed by an involuntary termination of employment that occurs on or after March 2, 2010, and on or before March 31, 2010. The prior rule was that involuntary terminations of employment and reductions in hours in anticipation of involuntary terminations were the only Qualifying Events eligible for the subsidy. The term in anticipation was undefined and difficult to administer.
- Enhanced Enforcement: If a plan sponsor or insurance carrier continues to deny a subsidy request even after the DOL has ruled that it should be approved, a penalty of up to $110 per day may be issued. This penalty would start 10 days after the plan sponsor or insurance carrier received the DOLs determination.
- Employer Determination Safe Harbor: Employer determinations to provide the subsidy are deemed valid as long as the determination is based on a reasonable interpretation and the employer maintains supporting documentation.
The significant change involves the expanded eligibility related to reduction in hours. This rule only applies to periods of coverage beginning after March 2, 2010. Most COBRA periods of coverage start on the first of the month so the first subsidized coverage period would start on April 1, 2010.
Some Qualified Beneficiaries with a reduction in hours Qualifying Event may never have elected COBRA or at some point discontinued COBRA. For those individuals, a new special election right exists if they are terminated involuntarily on or after March 2, 2010, and on or before March 31, 2010. Plan administrators must notify them of their rights within 60 days of the involuntary termination of employment. These special election rules operate in the same way as last years ARRA special election rules.
AEIs making the special election do not have to pay for any gap in coverage between the two Qualifying Event dates. Any gap in coverage is not treated as a “break in coverage” under HIPAA portability rules.
The new law does not change the length of the COBRA maximum coverage period. It is still based on the original reduction in hours Qualifying Event date. Also, the COBRA maximum coverage period may have already expired for some of these individuals; in such an event, this law does not provide them with more COBRA coverage simply because they were involuntary terminated during the March 2-31, 2010, time frame. The subsidy period (up to 15 months) is based on the first coverage period after the March 2, 2010, date of enactment (i.e., April 1, 2010, for most plans).
This COBRA extension will probably not be the last one. The Senate is considering HR 4213, which was amended by Senate Amendment 3336. This bill would extend the subsidy eligibility period to December 31, 2010.
Employers should make sure they are in compliance with these new regulations which are now in effect. Please contact us for information or assistance.
Posted by Todd McDonald on December 23, 2009
The 9-month 65% federal COBRA premium subsidy program has been extended an additional 6 months (for a total of 15 months).
The program has also been extended to those who are involuntarily terminated through February 28, 2010.
A vailable at http://www.dol.gov/ebsa/newsroom/2009/ebsa122109.html
Employers should make sure they are in compliance with these new regulations which are now in effect. Please contact us for information or assistance.
We wish you the very best this holiday season and a prosperous 2010!
Posted by Todd McDonald on December 15, 2009
To be an Assistance Eligible Individual (AEI) under the COBRA premium assistance rules, a qualified beneficiary must (1) be eligible for COBRA during the period that begins 9/1/08 and ends 12/31/09, (2) have a qualifying event of involuntary termination during that period, and (3) elect COBRA.
The most recent version of FAQs on the DOL website addresses two potentially tricky timing rules regarding who is eligible for premium assistance and for how long:
Q&A-1 – Clarifies that, under current law, an individual who does not become eligible for COBRA until after December 31, 2009 is not eligible for assistance even if the involuntary termination of employment occurs on or before December 31, 2009.
Q&A-2 – Clarifies that once an individual becomes an AEI (with involuntary termination and COBRA eligibility both occurring by December 31, 2009), he or she will continue to be eligible for a full nine months of premium assistance even if that period extends beyond December 31, 2009. In the example given in the Q&A, if an AEI started COBRA on November 1, 2009, the individual would be entitled to nine months of ARRA premium assistance from November 1, 2009 through July 31, 2010 so long as the individual remained eligible. (Under the rules, the period of premium assistance could be cut short, for example, if required premiums were not paid or if the AEI became entitled to Medicare or other group health plan coverage.)
The answers to both FAQs note that legislation pending in Congress to extend the premium assistance rules could change the answers to these questions. Even though the exact timing and terms remain uncertain, employers should be prepared for an extension. Until such an extension occurs, these FAQs may surprise employees terminated in December but covered by health plans that extend “active” coverage until the end of the month. Under the DOL’s interpretation of the current rules, those employees will miss out on premium assistance by one day because they will not technically become eligible for COBRA until January 1, 2010 (the day after they lose active coverage).
Employers should make sure they are in compliance with these new regulations which are now in effect. Please contact us for information or assistance.
Available at http://www.dol.gov/ebsa/faqs/faq-cobra-arra.html
