Total Articles: 63
Practical Insights: Dealing with Medicare Part B and COBRA Coverage.
Generally, the Socal Security Act provides that individuals may enroll in Medicare Part B (which covers doctors visits and other outpatient services) when they reach age 65. If they fail to do so during a seven-month initial enrollment period surrounding their 65th birthday, they can enroll during an annual "general enrollment" period that occurs each January 1- March 31, with coverage becoming effective the following July1, though they will incur a penalty in the form of permanently higher Part B premiums (10% increase for each year of available coverage that is foregone). However, actively employed individuals who have employer-provided health coverage can postpone signing up for Medicare Part B until after age 65. When they lose the employer-provided coverage or terminate employment, whichever happens first, they are then provided an eight-month "special enrollment period" ("SEP") during which they can sign up for Medicare effective immediately and without penalty.
COBRA Subsidy Unlikely to be Extended Further.
The American Recovery and Reinvestment Act provided a 65% COBRA premium subsidy to eligible individuals
involuntarily terminated between September 1, 2008, and December 31, 2009. Congress later extended the subsidy three
times; most recently for those involuntarily terminated on or before May 31, 2010. (For information regarding the
original COBRA subsidy and the previous extensions, please see our archived E*Bulletins from April 2010, March 2010,
January 2010, March 2009, and February 2009.)
President Signs Another COBRA Subsidy Extension.
President Obama has signed legislation extending the COBRA premium subsidy to assist individuals who have lost their jobs since the previous COBRA subsidy expired March 31, 2010.
COBRA Subsidy Program Extended and DOL Model Notices Updated Again.
On April 15, President Obama signed into law the Continuing Extension Act of 2010 (the "Act"), thereby extending for a third time the program that subsidizes continued health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (and similar state continuation coverage laws) ("COBRA") for involuntarily terminated employees. That program provides that certain employees whose employment is involuntarily terminated can continue health coverage under COBRA by paying only 35% of the ordinary COBRA premiums for up to fifteen months. The insurer, the employer or the health plan pays the remaining 65%, which is recovered from the federal government through a credit against payroll tax liabilities or through direct reimbursement.
Third Extension of COBRA Premium Subsidy Extends Availability Through May 31, 2010.
Extended now for the third time, the availability of the COBRA premium subsidy has been extended through May 31, 2010. Late on April 15, 2010, President Obama signed H.R. 4851, the Continuing Extension Act of 2010. Final passage in the House of Representatives (votes 289-112) and in the Senate (votes 59-38) ensured that several government programs would be extended, including the COBRA premium subsidy.
COBRA Subsidy Eligibility Period Extended to May 31, 2010.
Last night, President Obama signed the Continuing Extension Act of 2010 (Act). The Act once again extends the eligibility period during which an involuntarily terminated individual can qualify for the COBRA subsidy originally created through the American Recovery and Reinvestment Act of 2009 (ARRA). The period during which an individual could qualify for the subsidy was originally set to expire on December 31, 2009, but was extended by the Defense Appropriations Act of 2010 until February 28, 2010, and extended again by the Temporary Extension Act of 2010 until March 31, 2010. The Act further extends the period during which an involuntarily terminated individual could qualify for the COBRA subsidy until May 31, 2010.
COBRA Subsidy Extended Again . . . and Again.
On April 15, 2010, Congress passed, and the President signed, the Continuing Extension Act of 2010. The Continuing
Extension Act of 2010 extends the existing 65% COBRA premium subsidy for employees who are involuntarily
terminated through May 31, 2010. The subsidy was originally provided through December 31, 2009, under the American
Recovery and Reinvestment Act (“ARRA”), and was previously extended through February 28, 2010, and then March 31,
2010, via the 2010 Department of Defense Appropriations Act and the Temporary Extension Act of 2010, respectively.
For information regarding the original COBRA subsidy and the previous extensions, please see our archived E*Bulletins
from March 2010, January 2010, March 2009, and February 2009.
Another Short-Term COBRA Subsidy Extension (now through May 31, 2010)
As anticipated, President Obama signed H.R. 4851 into law late in the evening on Thursday, April 15, 2010. Among other things, the law extends the COBRA subsidy to individuals losing coverage due to an involuntary loss of employment occurring from April 1, 2010, through May 31, 2010. As originally enacted, the subsidy could extend for as long as 9 months. Through previous extensions, however, the maximum period of subsidy was extended to 15 months. Also through previous extensions, subsidy eligibility was expanded to include individuals who lose coverage due to a reduction in hours, provided they subsequently suffer an involuntary loss of employment on, or after, March 2, 2010. As the ink dries on H.R. 4851, there is pending legislation (H.R. 4213) that would extend the deadline for subsidy eligibility to the end of the year. The Senate has already cleared the measure, and President Obama has publicly endorsed the idea, but the House of Representatives has yet to act on it. For guidance on this and other employment law questions, contact Krukowski & Costello, S.C. at 414-423-1330.
New Stopgap Extension of COBRA Subsidies - Further Extension Pending.
New Stopgap Extension of COBRA Subsidies - Further Extension Pending.
Cobra Subsidy Program Extended and Expanded Again; DOL Releases Updated Model Notices.
On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (the "Act"), provisions of which extend several assistance programs that are essential to the many persons currently unemployed in the U.S. In relevant part, the Act extended, for a second time, the program that subsidizes continued health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (and similar state continuation coverage laws) ("COBRA") for involuntarily terminated employees. That program, initially enacted as part of the American Recovery and Reinvestment Act of 2009 ("ARRA") and more fully described in a prior Cooley Alert, provides that certain employees whose employment is involuntarily terminated between September 1, 2008 and December 31, 2009 (resulting in COBRA continuation coverage eligibility during that period) can continue health coverage under COBRA by paying only 35% of the ordinary COBRA premiums for up to nine months. The insurer, the employer or the health plan pays the remaining 65%, which is recovered from the federal government through a credit against payroll tax liabilities or through direct reimbursement. In December 2009, that program was extended and expanded by the Department of Defense Appropriations Act, 2010 (the "Appropriations Act"), as described in a prior Cooley Alert.
COBRA Subsidy Extended and Modified.
Newly-enacted legislation extends and expands the 65 percent federal COBRA subsidy under the American Recovery and Reinvestment Act (ARRA) in cases of involuntary termination of employment. A stopgap measure signed into law on March 2 by President Barack Obama extends the end of the eligibility period from February 28 to March 31, 2010, and makes other longer-lasting changes to the year-old subsidy arrangement. These changes include:
COBRA Subsidy Extended Again.
Once again President Obama signed into law another extension to the COBRA subsidy originally created by the American Recovery and Reinvestment Act ("ARRA"). This new legislation, the Temporary Extension Act ("the Act") of 2010, extends the COBRA subsidy to those involuntarily terminated through March 31, 2010.
COBRA Subsidy Extended.
On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (Act) that once again extended the eligibility period during which an involuntarily terminated individual could qualify for the COBRA subsidy originally created through the American Recovery and Reinvestment Act of 2009 (ARRA). The period during which you could qualify for the subsidy was originally set to expire on December 31, 2009, but was extended by the Defense Appropriations Act of 2010 until February 28, 2010. This period has again been extended by the Act to March 31, 2010.
COBRA Subsidy Extended Again (pdf).
On March 2, 2010, the President signed the Temporary Extension Act of 2010, which, among other things, extends the
65% COBRA premium subsidy through March 31, 2010. The subsidy was originally provided through December 31,
2009, under the 2009 stimulus act (the American Recovery and Reinvestment Act or “ARRA”), and was previously
extended through February 28, 2010, via the 2010 Department of Defense Appropriations Act. (For information regarding
the original COBRA subsidy and the previous extension, please see our previous E*Bulletins from January 2010, March
2009, and February 2009).
Cobra Subsidy Extended Through March 31, 2010.
On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (H.R. 4691), which amends the American Recovery and Reinvestment Act of 2009 (ARRA). Among other things, the Act extends eligibility for the 65%, 15-month COBRA premium subsidy to individuals who have been involuntarily terminated through March 31, 2010. Without the extension, employees laid off after February 28th would have been ineligible for the subsidy. The law is retroactive, so individuals who were involuntarily terminated on March 1st and 2nd are eligible for the subsidy.
COBRA Subsidy Extended Until March 31, 2010.
On March 2, 2010, President Obama signed legislation that, among other things, extends the eligibility period for the COBRA subsidy provided in the American Recovery and Reinvestment Act (ARRA) for an additional 30 days. The Temporary Extension Act of 2010, H.R. 4691, extends the eligibility date for the COBRA subsidy from February 28, 2010 to March 31, 2010. The ARRA permits "assistance eligible individuals" to receive a 65% subsidy of the COBRA premiums they would be required to pay for any group health plan in which they participated at the time of their termination.
Stopgap Extension of COBRA Subsidies - Further Extension Likely.
On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (H.R. 4691),
which includes a stopgap extension from March 1, 2010 through March 31, 2010 of eligibility for the
COBRA subsidies that were originally part of the American Recovery and Reinvestment Act of 2009
(“ARRA”).1 The legislation also clarifies Congress’ intent that an employee who loses coverage as a
result of a reduction in hours and later incurs an involuntary termination of employment is eligible to elect
subsidized COBRA coverage.
The Model Employer CHIPRA Notice.
Right on the heels of the COBRA subsidy and subsidy extension notices required as a result of the COBRA subsidy and its extension, here is yet another notice that employers with group health plans must send to their employees annually. On February 4, 2010, the Department of Labor issued a model notice for employers to use in drafting their annual Children’s Health Insurance Program Reauthorization Act (“CHIPRA”) notice. The model notice can be found at http://www.dol.gov/ebsa/chipmodelnotice.doc.
COBRA Subsidy Extended.
On December 19, 2009, President Obama signed the 2010 Defense Appropriations Bill, which included an extension of the 65% COBRA Subsidy provision originally enacted last February in the Stimulus Bill. The new law affects the COBRA subsidy as follows:
President Extends COBRA Subsidy Under New Department of Defense Appropriations Act.
On December 21, 2009, President Obama signed legislation extending the COBRA premium subsidy originally established under the American Recovery and Reinvestment Act of 2009 ("ARRA"). Under the ARRA, only individuals who were involuntarily terminated and who lost group health insurance coverage before December 31, 2009 were eligible to receive the subsidy. Moreover, the subsidy was only available for nine months of coverage.
Congress Extends COBRA Subsidy to HelpWorkers (pdf).
Congress gave recession weary families
some good news just before its December
recess. In a move designed to help families
retain their employer sponsored insurance,
Congress extended last year’s COBRA subsidy.
The news couldn’t have come at a better
time for families looking at the looming
December 31 cutoff for the subsidy.
DOL Issues Model Notices for COBRA Subsidy Extension
The Department of Labor (the “DOL”) has issued three model notices for communicating the recent extension of the Federal COBRA subsidy.
Congress Extends COBRA Subsidy.
Though preoccupied with national healthcare legislation, Congress passed legislation on December 19th extending the COBRA subsidy eligibility period and coverage period. The extension came as part of the Fiscal Year 2010 Defense Appropriations Act.
COBRA SUBSIDY EXTENDED.
On December 21, 2009 President Obama signed into law an extension to the COBRA subsidy created by the American Recovery and Reinvestment Act ("ARRA"). This new legislation, which is part of the 2010 appropriations bill for the Defense Department ("the Act"), not only extended the period during which involuntary terminations would trigger subsidy eligibility, it also expanded the duration of the subsidy.
Extension of COBRA Subsidy.
As was anticipated, legislation amending the American Recovery and Reinvestment Act of 2009 has been enacted that extends the eligibility period for the COBRA subsidy to February 28, 2010. In the absence of the amendment, the eligibility period would end December 31, 2009. In addition, the bill extends the duration of the subsidy from nine months to 15 months.
COBRA Subsidy Extended.
The COBRA subsidy first provided by the American Reinvestment and Recovery Act of 2009 was extended on December 21, 2009. The extension was authorized by a provision in the 2010 Defense Appropriations Act (“Act”). Employers should become familiar with this extension and coordinate with their service providers to ensure appropriate steps are taken to implement the changes.
COBRA Subsidy Extended.
Just in time for the holidays, and as part of the 2010 appropriations bill for the Defense Department (the Act), President Barack Obama today signed into law an extension to the subsidy for COBRA created by the American Recovery and Reinvestment Act (ARRA). The legislation extended the period during which involuntary terminations would trigger subsidy eligibility, as well as expanding the duration of the subsidy. Employers and plan administrators also will face new notice and administrative requirements to implement the subsidy extension on a retroactive basis. Below are a few of the highlights.
Congress Extends COBRA Premium Subsidy.
On December 21, 2009, President Obama signed into law the Fiscal Year 2010 Defense Appropriations Act. The Act extends the current nine-month COBRA subsidy for an additional six months, for a total of 15 months. It also extends eligibility for the subsidy to workers who are involuntarily terminated through February 28, 2010. The prior law covered workers involuntarily terminated through December 31, 2009. The Act requires employers to provide current and future COBRA beneficiaries with notice of the extension.
COBRA Subsidy Expanded and Extended.
On December 19, 2009, President Obama signed into law the Department of Defense Appropriations Act, 2010 (the "Appropriations Act"), provisions of which extend and expand the program that subsidizes continued health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (or similar state continuation coverage laws) ("COBRA") for involuntarily terminated employees. That program, initially enacted as part of the American Recovery and Reinvestment Act of 2009 ("ARRA") and as more fully described in a prior Cooley Alert, provides that certain employees whose employment is involuntarily terminated between September 1, 2008 and December 31, 2009 can continue health coverage under COBRA by paying only 35% of the ordinary COBRA premiums for up to nine months. The insurer, the employer or the health plan pays the remaining 65%, which is recovered from the federal government through a credit against payroll tax liabilities or through direct reimbursement.
President Extends COBRA Subsidy Under New Department of Defense Appropriations Act.
On December 21, 2009, President Obama signed legislation extending the COBRA premium subsidy originally established under the American Recovery and Reinvestment Act of 2009 ("ARRA"). Under the ARRA, only individuals who were involuntarily terminated and who lost group health insurance coverage before December 31, 2009 were eligible to receive the subsidy. Moreover, the subsidy was only available for nine months of coverage.
COBRA Subsidy Extension.
On December 16 and December 19, respectively, the U.S. House of Representatives and the U.S.
Senate passed a temporary extension to the COBRA subsidies that were originally enacted in the
American Recovery and Reinvestment Act of 2009 (ARRA).1 This new legislation is expected to be
signed by President Obama by the end of 2009, and requires immediate attention by employers, as the
original ARRA COBRA subsidies either have expired or are in the process of expiring. Also, this legislation
requires notifi cation to certain individuals within 60 days after the legislation is signed into law.
COBRA Subsidy Is Extended*
The eligibility for the COBRA premium subsidy was about to expire for those individuals who are involuntarily terminated and become eligible for COBRA benefits after December 31, 2009. However, on December 21, 2009, the President signed legislation that extends the eligibility for the subsidy to those individuals who are involuntarily terminated and become eligible for COBRA coverage before February 28, 2010.
Domestic Partner's Right to Continued Health Coverage Under COBRA, Cal-COBRA and Analogous State Laws.
It is increasingly common for employers, especially those based in California, to offer health benefits to domestic partners of their employees. In certain instances when access as an active employee to health benefits is lost (e.g., due to termination of employment for a reason other than "gross misconduct"), such former employees have a right under federal or state law to elect to continue health coverage for a period of time. However, whether an employee's domestic partner has a right to elect continued health coverage may depend on whether the employer plan providing the health coverage is subject to federal or state continuation coverage law. Domestic partners are not legally recognized for purposes of federal law due to the federal Defense of Marriage Act ("DOMA"), which provides that "‘marriage' means only a legal union between one man and one woman as husband and wife." However, recent guidance from the San Francisco Regional Office of the U.S. Department of Labor (the "DOL") indicates that an employee's domestic partner may be eligible for continued health coverage under COBRA in certain circumstances and that, as a result, the DOMA would not preclude such coverage.
Appeals of COBRA Premium Assistance Denials to be Handled by New Services Provided by the Centers for Medicare and Medicaid Services.
For expedited reviews of COBRA premium assistance denials, former federal and state workers can now use a new website and hotline launched by the Centers for Medicare and Medicaid Services ("CMS"). The American Recovery and Reinvestment Act of 2009 ("ARRA") provided for, among other things, an expedited review of the denial of benefits when an individual's former group health plan denies eligibility for COBRA premium assistance. Under the ARRA, the CMS processes all requests for review that are filed by federal government employees, employees of state and local governments, and individuals covered by state continuation coverage laws that apply to employers with fewer than 20 employees (also known as "mini-COBRA" programs). Last week, CMS launched a website, http://www.ContinuationCoverage.net, and a toll free hotline, 1-866-400-6689, that unemployed workers in these categories can use to request an expedited review of their former employer's denial of eligibility for COBRA premium assistance.
IRS Issues Guidance Regarding Administration of the COBRA Subsidy.
Now that the Department of Labor has issued several pieces of formal guidance aimed at assisting employers and insurance carriers to implement the COBRA subsidy rules introduced by the American Recovery and Reinvestment Act of 2009 ("ARRA"), the IRS has now issued additional guidance aimed at assisting employers in administering the COBRA subsidy.
Michelle's Law Provides Extended Medical Coverage For Students.
Michelle's Law provides that a group health plan that offers dependent coverage and conditions that coverage upon status as a full-time student may not terminate the dependent's coverage when the dependent ceases to meet the "full-time" criteria due to a "medically necessary leave of absence." This law is intended to protect parents of college students who lose "student status" due to illness from the financial burdens of COBRA.
DOL Issues Guidance Regarding Procedure for Appealing Denial of COBRA Subsidy.
On May 21, 2009, the Department of Labor (DOL) issued guidance detailing the procedures applicants for COBRA premium assistance, available under the American Recovery and Reinvestment Act of 2009 (ARRA), may use to appeal a denial of their eligibility for the premium subsidy.
IRS COBRA Subsidy Guidance Published.
On April 1, the IRS published Notice 2009-27,
completing the primary round of regulatory
guidance regarding the COBRA subsidy provisions
that were part of the American Recovery and
Reinvestment Act of 2009 (“ARRA”). On April 2, the
DOL revised its Q&As regarding the model ARRA
COBRA notices that were published on March 19.
Vedder Price has previously published Employee
Benefi ts Briefi ngs regarding the COBRA provisions
of ARRA (February 17, 2009) and the DOL model
notices (March 25, 2009), both of which are
available at www.vedderprice.com.
Stimulus Bill Includes Significant COBRA Changes For Employers.
The sprawling stimulus legislation that may or may not jumpstart the U.S. economy has certainly jumpstarted employers' interest in coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). That's because the temporary federal COBRA subsidy for involuntarily terminated employees that is at the heart of the American Recovery and Reinvestment Act (ARRA) of 2009 represents the highest-profile expansion of the basic COBRA framework in its 23-year history. The subsidy took effect for monthly or other periods of COBRA coverage beginning after February 17, 2009.
IRS Issues Additional Guidance on COBRA Premium Subsidy
The American Recovery and Reinvestment Act of 2009 (the “ARRA”) expands the rights of assistance eligible individuals under the Consolidated Omnibus Budget and Reconciliation Act of 1985, as amended (“COBRA”), by subsidizing 65 percent of their COBRA premiums. On March 31, 2009, the Internal Revenue Service issued Notice 2009-27 (the “Notice”). The Notice, which consists of 58 “Q&As,” provides information on a wide-range of topics related to the ARRA, including what constitutes an “involuntary termination,” who qualifies as an “assistance eligible individual,” how to calculate the premium reduction, what type of coverage is eligible for the premium reduction, and what is considered the beginning and end of the premium reduction period. The Notice also provides additional information on the recapture of the COBRA premium subsidy, the extended election period, payments to insurers, and the application of the subsidy rules to comparable state continuation coverage programs. This Alert sets forth some of the guidance covered in the Notice.
More Guidance Concerning the COBRA Subsidy.
The IRS has issued additional guidance concerning the new COBRA subsidy in the form of Notice 2009-27, which can viewed on the IRS website (www.irs.gov).
Amended COBRA Notices Must be Provided by April 18, 2009.
This is a reminder that, in accordance with amendments made to COBRA by the 2009 American Recovery & Reinvestment Act ("ARRA"), COBRA Plan Administrators must provide amended COBRA notices to assistance eligible individuals on or before April 18, 2009.
LOOMING COBRA DEADLINE - DOL ISSUES MODEL NOTICES.
The U.S. Department of Labor ("DOL") has issued four Model Notices to help employers implement the new mandatory COBRA subsidy provisions of the "The American Recovery and Reinvestment Act of 2009," also known as the Stimulus Bill.
IRS COBRA Subsidy Guidance Published.
IRS COBRA Subsidy Guidance Published - DOL Model COBRA Notice Guidance Revised.
COBRA Subsidy Update: IRS Clarifies Law; Also: Model Notice Forms Available; Cal-COBRA Employers Get a Break.
Last month we reported on the new COBRA obligations, and this month there is updated information to disseminate.
Be Careful What You Wish For - Latest IRS COBRA Guidance Has Some Surprises for Employers (pdf).
Employers now have an answer to their single biggest and most vexing question about the elaborate new federal subsidy arrangement under the Consolidated Omnibus Budget Reconciliation Act (COBRA), but it may not be the answer they were hoping for or expecting. Under new IRS Notice 2009-27, an “involuntary termination” would include certain employee-initiated “good reason” terminations, layoffs with recall rights, and even certain cases where employees took severance buy-outs.
IRS Issues Guidance Addressing Questions Regarding the Application of the COBRA Subsidy.
On March 31, 2009, the Internal Revenue Service ("IRS") issued long-awaited guidance, Notice 2009-27, relating to the premium assistance for COBRA continuation coverage available under the American Recovery and Reinvestment Act of 2009 ("ARRA"). This guidance provides the background for the premium assistance and the extended election period for COBRA continuation coverage.
IRS ISSUES GUIDANCE TO EMPLOYERS ABOUT NEW COBRA SUBSIDY.
The Internal Revenue Service has published further guidance for employers explaining how to obtain reimbursement for the new employer-paid COBRA subsidy mandated by the American Recovery and Reinvestment Act of 2009. As we previously reported to you (CM - 2/24/09), the new law requires employers to fund 65% of eligible employees' COBRA continuation premiums for up to 9 months. The guidance explains that employers can claim the COBRA subsidy as a credit on their quarterly employment tax return, IRS Form 941, which has been updated to allow for this credit.
Stimulus Package Creates Subsidy for Health Care Continuation Coverage
On Feb. 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the “ARRA”). The ARRA seeks to stimulate the economy by authorizing approximately $787 billion in tax cuts and spending for a variety of programs, including health, education and job creation. Of immediate significance to employers, health plans and insurers are provisions that expand the rights of terminated employees under the Consolidated Omnibus Budget and Reconciliation Act of 1985, as amended (“COBRA”). This Alert summarizes the ARRA’s changes to COBRA, describes employers’ obligations under this new legislation and provides guidance on various notice requirements.
COBRA Obligations Expanded; Economic Stimulus Bill Adds Premium Subsidy.
Employers’ obligations under COBRA have been significantly increased by the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA is commonly known as the economic stimulus legislation recently passed by Congress and signed by President Obama.
Stimulus Law Includes New Premium Subsidy for COBRA Beneficiaries (pdf).
On February 17, 2009, President Obama signed the American Recovery and
Reinvestment Act of 2009, generally known as the economic stimulus law. The stimulus
law creates new COBRA rules intended to help those who lose group medical plan coverage
due to an involuntary termination of employment between September 1, 2008 and December
31, 2009.
How Employers May Claim the Tax Credit for COBRA Subsidies Paid under the American Recovery and Reinvestment Act.
The Internal Revenue Service has released new guidance that will help employers claim credit for the COBRA subsidy that they pay for their former employees under the American Recovery and Reinvestment Act ("the Act"), passed February 17, 2009. The guidance, in question and answer form, and IRS Form 941 that employers must use to claim the new tax credit, may be found on the IRS web site, at http://www.irs.gov/newsroom/article/0,,id=204708,00.html. The IRS will continue to provide updated information through this web site as it becomes available.
COBRA’S NEW BITE: STIMULUS PACKAGE ADDS EMPLOYER PAID COBRA PREMIUM SUBSIDY.
The economic stimulus package signed by President Obama on February 17, 2009 (its official title is "The American Recovery and Reinvestment Act of 2009") creates a new temporary employer paid COBRA subsidy. Under the new law, which is effective immediately, employers are required to fund 65% of an employee's COBRA premiums for up to 9 months. This FAQ provides an overview of the key changes.
Stimulus Law Makes Major Changes to COBRA.
On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act (H.R. 1). The Act contains significant changes to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage rules. The key changes are (1) the government will subsidize 65% of the cost of COBRA premiums for eligible individuals, and (2) eligible individuals who were involuntarily terminated since September 2008 will have a second
chance to elect COBRA. The changes are generally effective March 1, 2009.
Stimulus Law Makes Major Changes to COBRA.
On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act (H.R. 1). The Act
contains significant changes to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage
rules. The key changes are (1) the government will subsidize 65% of the cost of COBRA premiums for eligible
individuals, and (2) eligible individuals who were involuntarily terminated since September 2008 will have a second
chance to elect COBRA. The changes are generally effective March 1, 2009.
Economic Stimulus Act Impacts COBRA Coverage.
Signed by President Obama on February 17, 2009, the American Recovery and Reinvestment Act of 2009 ("ARRA"or the "Act") expands COBRA in ways that, although temporary, will certainly impact employers. Most significantly, the ARRA offers "assistance eligible individuals" a 65% subsidy of their required COBRA premiums and an additional enrollment period within which to elect COBRA coverage.
Economic Stimulus Bill Expands Cobra Requirements.
On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA), which, among other things, provides for a nine-month subsidy of COBRA premiums for employees who are involuntarily terminated. The law also subjects employers to additional administrative and notice requirements.
American Recovery and Reinvestment Act of 2009 Creates New Cobra Rules for Employers.
Under federal law, employers with 20 or more employees must offer continuation coverage (COBRA continuation coverage) to former employees, their spouses and dependents (i.e., qualified beneficiaries) if they lose coverage due to certain qualifying events, such as a termination of employment. On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (the 2009 Recovery Act) was enacted, which, in part, provides assistance to unemployed workers and their families for obtaining COBRA continuation coverage. Additional guidance is expected in the coming weeks. A brief summary of the new COBRA rules follows.
Important Expansion of COBRA Law In American Recovery and Reinvestment Act of 2009.
Responding to increasing unemployment from the dramatic downturn affecting all sectors of the economy, the United States Congress has expanded the premium and notice obligations of employers under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA. Provisions in the American Recovery and Reinvestment Act of 2009 (“the Act”) reduce how much certain employees must contribute to obtain COBRA continuation health coverage, provide a subsidy to employers for their portion of the cost of coverage, and add new requirements for notices which must be provided to COBRA qualified beneficiaries.
COBRA Subsidy Requires Immediate Attention (pdf).
The economic stimulus legislation signed into law
by President Obama on February 17th (The
American Recovery and Reinvestment Act of 2009)
contains COBRA subsidies for employees who are
involuntarily terminated between September 1, 2008
and December 31, 2009. This COBRA subsidy
applies to all employers that maintain a group health
plan regardless of whether they are currently
subject to the general healthcare continuation rules
under COBRA.
President Signs Stimulus Bill With Significant COBRA Changes for Employers.
The sprawling stimulus legislation that may or may not jumpstart the U.S. economy will almost certainly jumpstart employers’ interest in COBRA coverage.
10 Common COBRA Screw-Ups – And How You Can Avoid Them.
It seemed like such a simple idea – let people continue their employer-provided health insurance when they lose a job or get divorced. And, 22 years after Congress fell for the idea, you would think the benefits administration world would have COBRA down cold. You would be wrong. When it comes to COBRA administration, practice has definitely not made perfect.
Failure to Define End of COBRA Election Period Proves Costly (pdf).
A recent decision of the United States Court of Appeals for the Fifth Circuit stands as a harsh reminder that careful drafting of employee benefit plan documents can be essential to avoiding unanticipated liability. In LifeCare Hospitals v. Health Plus of Louisiana, No. 04-30422, 2005 U.S. App. LEXIS 14640 (5th Cir. July 20, 2005), the insurer of an employer-sponsored health care plan was required to pay more than $250,000 in medical claims on behalf of a former employee of the plan sponsor, even though the former employee arguably had failed to elect COBRA continuation coverage within sixty days of his termination of employment and receipt of COBRA election forms, because the plan document did not specify when the COBRA election period for the plan would end. The Fifth Circuit rejected the carrier's argument that when the plan document fails to define the end of the election period, the election period is limited to the 60 day minimum period required under the statute.
