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Total Articles: 23

Are You on Top of Your COBRA Obligations? You Better Be – $110 a Day for COBRA Violations Adds Up Fast!

Employers have long been required to provide continuation of health care coverage when an employee leaves the company under most circumstances. However, the nitty gritty on what paperwork has to be provided and when is not always on the top of the to-do list when an employment relationship begins or ends. However, it should be because the Consolidated Omnibus Budget Reconciliation Act (COBRA), a federal law, has strict time requirements and stiff penalties for non-compliance.

Employment Law Made Un-Scary: COBRA

Everything you need to know about COBRA in one handy post

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.)

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.

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 (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.

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:

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.

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.

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.

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.

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.

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.

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.

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 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.

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.
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