News for Employers from Old Pueblo Benefits

News for Employers

from Old Pueblo Benefits. Old Pueblo posts this information as an advisory only. Please contact us for a personal consultation so we can help you comply with the latest requirements and benefit from new legislation.

 

COBRA Provisions in the American Recovery and Reinvestment Act.

Congress has passed the American Recovery and Reinvestment Act ("the Act"), and the Act has been signed by President Obama.

The Act is effective February 17, 2009, the day that President Obama signed the bill. All of the COBRA provisions that have a time frame will date from that day. As for calendar monthly billed programs, the effective date is March 1, 2009.

Notice Requirements and Election Period

Under the Act employers must provide modified election notices or provide separate supplemental notices to all persons who became entitled to elect COBRA continuation coverage during the period beginning on September 1, 2008 and ending on December 31, 2009.

New Subsidy for COBRA Beneficiaries

The Act provides for a new subsidy for certain COBRA beneficiaries. The subsidy is 65% of the COBRA continuation coverage premiums for eligible individuals for up to 9 months. The COBRA beneficiary will pay only 35% of the overall COBRA premium for that period. The period expires on the earlier of (i) nine months, (ii) the date the individual becomes eligible for major medical group coverage or Medicare or (iii) the end of the maximum required period of continuation under COBRA. Further, the beneficiary must notify the employer in writing if they become eligible for coverage under a major medical group health plan or Medicare and is subject to significant penalties (110% of the subsidy amount) for failing to do so.

Recipients and Deadlines for Notification

Four types of involuntarily terminated employees must be notified of certain rights under ARRA:

  • Individuals Who Did Not Elect COBRA. Involuntarily terminated on or after September 1, 2008, and before February 17, 2009. This group includes qualified beneficiaries who assertively waived their rights or let their election periods expire.
    • Notices: ARRA Second Election Notice and Notice of Premium Assistance Rights (These notices may be merged and presented as one.)
    • Model Notice Deadline: March 19, 2009
    • Delivery Deadline: April 18, 2009 (No later than 60 days after the enactment date.)
  • Individuals Who Were In Their 60-day Election Period On February 17. Involuntarily terminated on or after September 1, 2008, and before February 17, 2009.
    • Notices: ARRA Second Election Notice and Notice of Premium Assistance Rights (These notices may be merged and presented as one.)
    • Model Notice Deadline: March 19, 2009
    • Delivery Deadline: April 18, 2009 (No later than 60 days after the enactment date.)
  • Those Who Elected COBRA Coverage And Remain Covered. Involuntarily terminated on or after September 1, 2008.
    • Notice: Notice of Premium Assistance Rights
    • Model Notice Deadline: March 19, 2009
    • Delivery Deadline:
      • As Soon As Reasonably Practicable The Act does not specify a timeframe for notification of assistance eligible individuals who are currently covered under COBRA. However, because premium payment assistance will begin on March 1 for most employers, you should deliver this notice in a reasonable timeframe following enactment of the law.
  • Those who were or will be involuntarily terminated between February 17 and December 31, 2009.
    • Notice: Notice of Premium Assistance Rights. Sent with the Qualifying Event (QE) Notice. (These notices may be merged and presented as one.)
    • Model Notice Deadline: March 19, 2009
    • Delivery Deadline: 44 Days After The Termination Date For eligible individuals terminated after ARRA's enactment, the normal notification delivery rules apply. Qualified beneficiaries must be notified of their COBRA election rights, including their new rights under ARRA, no later than 44 days after the qualifying event date. (30 days for the employer to notify the plan administrator, 14 days for the plan administrator to furnish the notice. 44 days when the employer is also the plan administrator.)
    Electing a Different COBRA Option

    An employer may allow a COBRA-subsidy eligible individual to change his or her health insurance coverage option when making a COBRA election. The new plan option must be made within 90 days of receipt of the COBRA election notice, must have the same or lower premiums and must be available to non-COBRA active employees under the plan.

    Be aware that this information is subject to change as we receive guidance from the regulatory agencies