COBRA_subsidy

Main Page

American Recovery and Reinvestment Act of 2009

COBRA News Central

CobraAid is committed to helping you better understand your COBRA responsibilities under ARRA and providing

you with an easy way to get the answers you need.


	March 3, 2010 President Obama Tuesday night signed into law legislation that provides a stopgap, 31-day extension of federal subsidies of COBRA health care premiums. The measure was approved earlier Tuesday by the Senate on a 78-19 vote, while the House cleared it last week Under H.R. 4691, the 65%, 15-month premium subsidy for laid-off workers is extended to those involuntarily terminated from March 1 through March 31. Without the extension, employees laid off after Feb. 28 would have been ineligible for the subsidy. The measure also will allow employees to receive the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the legislation, if certain conditions are met. Meanwhile, the Senate Wednesday will continue consideration of legislation, H.R. 4213, that would extend the premium subsidy to employees laid off through Dec. 31, 2010. February 26, 2010 COBRA Subsidy Extension stalled in Senate After the House passed a month-long extension of COBRA and other benefits for laid-off workers, the Senate Thursday did not follow suit, "jeopardizing unemployment benefits scheduled to expire over the weekend," The Associated Press reports. The extension will likely expire Sunday because the Senate "couldn't overcome the objections of a single lawmaker, Republican Sen. Jim Bunning of Kentucky, that the $10 billion bill would add to the budget deficit. The bill would extend unemployment payments to laid-off workers and provide them with subsidies to help pay health premiums through the COBRA program," which allows laid-off employees to keep their employer's health coverage for up to 18 months. "The Senate adjourned just before midnight with no further votes scheduled until Tuesday. Week of 1/11/2010 New COBRA Subsidy Extension notices are now available. Below are additional documents administrators might find useful. Step-by-step COBRA subsidy guide for employers. While waiting for the new COBRA notices to become available, employers should take steps to prepare. For a step-by-step guide, click here. COBRA Premium Assistance Tracking Spreadsheet. Download here. Use this form to keep track of individual COBRA notices sent, notices that need to be sent, etc. 12/29/2009 The U.S. Department of Labor is expected to issue guidance on language to be included in the new COBRA subsidy extension notices in the next week. CobraAid will post updated notices as soon as this guidance becomes available. 12/28/2009 Changes Regarding COBRA Continuation Coverage Under ARRA, as amended by the 2010 DOD Act The 2010 DOD Act extended the COBRA premium reduction eligibility period for two months until February 28, 2010 and increased the maximum period for receiving the subsidy for an additional six months (from nine to 15 months). In addition, individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have an extension of their grace period to pay the reduced premium. To continue their coverage they must pay the 35 percent of premium costs by February 17, 2010, or, if later, 30 days after notice of the extension is provided by their plan administrator. Individuals who lost their subsidy and paid the full 100 percent premium in December 2009 should contact their plan administrator or employer sponsoring the plan to discuss a credit for future months of coverage or a reimbursement of the overpayment. *Eligibility for the Premium Reduction:* The premium reduction for COBRA continuation coverage is available to "assistance eligible individuals". An "assistance eligible individual" is the employee or a member of his/her family who: has a qualifying event for continuation coverage under COBRA or a State law that provides comparable continuation coverage (for example, so-called "mini-COBRA" laws) that is the employee's involuntary termination at any point from September 1, 2008 through February 28, 2010; and elects COBRA coverage timely. Those who are eligible for other group health coverage (such as a spouse's plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for premiums paid for periods of coverage that began prior to February 17, 2009. Assistance eligible individuals who pay 35 percent of their COBRA premium are treated as having paid the full amount. The premium reduction (65 percent of the full premium) is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes. *Period of Coverage* The premium reduction applies to periods of coverage beginning on or after February 17, 2009. A period of coverage is a month or shorter period for which the plan charges a COBRA premium. The premium reduction for an individual ends upon eligibility for other group coverage (or Medicare), after 15 months of the reduction, or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must inform their plans if they become eligible for coverage under another group health plan or Medicare. *Notice Requirements* ARRA, as amended, mandates the provision of certain notices. As part of the COBRA election notice, plan administrators must provide information about the premium reduction to all individuals who have COBRA qualifying events from September 1, 2008 through February 28, 2010. Plan administrators must also provide notice about the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act to individuals who have already been provided a COBRA election notice (unless the election notice included the updated premium reduction information). Individuals who are "assistance eligible individuals" must be provided this notice by February 17, 2010; Individuals who experience a termination of employment on or after October 31, 2009 and lose health coverage must be provided this notice within the normal timeframes for providing continuation coverage notices; and Individuals who are in a "transition period" (a period that begins immediately after the end of the nine months of premium reduction in effect under ARRA before the amendments made by the 2010 DOD Act, as long as those nine months ended before December 19, 2009 and the premium reduction provisions of the 2010 DOD Act would apply due to the extension from nine to 15 months) must be provided this notice within 60 days of the first day of the transition period. *Expedited Review of Denials of Premium Reduction:* Individuals who are denied treatment as assistance eligible individuals and thus are denied eligibility for the premium reduction (whether by their plan, employer or insurer) may request an expedited review of the denial by the U.S. Department of Labor. The Department must make a determination within 15 business days of receipt of a completed request for review. The official application form is available at www.dol.gov/COBRA and can be filed online or submitted by fax or mail. *Switching Benefit Options:* If an employer offers additional coverage options to active employees, the employer may (but is not required to) allow assistance eligible individuals to switch the coverage options they had when they became eligible for COBRA. To retain eligibility for the ARRA premium reduction, the different coverage must have the same or lower premiums as the individual's original coverage. The different coverage cannot be coverage that provides only dental, vision, a health flexible spending account, or coverage for treatment that is furnished in an on-site facility maintained by the employer. *Income limits:* If an individual's modified adjusted gross income for the tax year in which the premium assistance is received exceeds $145,000 (or $290,000 for joint filers), then the amount of the premium reduction during the tax year must be repaid. For taxpayers with adjusted gross income between $125,000 and $145,000 (or $250,000 and $290,000 for joint filers), the amount of the premium reduction that must be repaid is reduced proportionately. Individuals may permanently waive the right to premium reduction but may not later obtain the premium reduction if their adjusted gross incomes end up below the limits. If you think that your income may exceed the amounts above, consult your tax preparer or contact the IRS at www.irs.gov. 12/22/2009 To view the text of the bill, click here. President Obama signed into law on Dec. 21 an extension of the COBRA premium subsidy under the American Recovery and Reinvestment Act (ARRA) that was due to expire on Dec. 31. Under the original law, an Assistance Eligible Individual (AEI) is any COBRA qualified beneficiary who elects COBRA coverage and: (1) has a loss of group health coverage as a result of an involuntary termination of employment (other than gross misconduct); and (2) has a qualifying event between Sept. 1, 2008, and Dec. 31, 2009, is otherwise eligible for COBRA coverage during that period and elects that coverage. . Key provisions of the COBRA subsidy extension: 1) The amount of time an AEI can receive a subsidy increases from nine to 15 months. 2) The subsidy eligibility period will now end on Feb. 28, 2010 (extended from Dec. 31, 2009). The new rule does not require COBRA coverage to begin by Feb. 28, only that the involuntary termination of employment occur by Feb. 28. 3) New COBRA notices must be provided to those individuals who either failed to pay the unsubsidized COBRA premium, or failed to pay any COBRA premium, during the transition period. The notice must be provided within the first 60 days of their transition period, and must include information on the ability to make retroactive premium payments. 4) During the transition period, an individual will be credited with having made a timely payment if they (a) had COBRA coverage during the period of coverage immediately preceding the transition period; and (b) make the subsidized premium payment within 60 days after the extension enactment date (or, if later, 30 days after the new notices are provided). 5) A refund or credit must be provided to an AEI who paid the full, unsubsidized premium during the transition period. 6) New COBRA notices must be sent to individuals who became AEIs on or after Oct. 31, 2009, or experience a qualifying event on or after that date. The notice must be provided within 60 days after the extension’s enactment date or, in the case of a qualifying event occurring after the enactment date, consistent with the timing of COBRA notices. The Department of Labor is expected to issue guidance on language to be included in the new COBRA notices. CobraAid will post these notices in the Members Area of our website as soon as possible. 12/17/2009 The U.S. House of Representatives yesterday passed legislation that would extend the COBRA subsidy for employees and covered dependents who lost group health coverage as a result of an involuntary termination of employment. The bill would extend the subsidy by six months, for a total of 15 months. The new law would apply to those who are involuntarily terminated through February 28, 2010. Under current ARRA provisions, eligibility will end on 12/31/2009. . The legislation would give beneficiaries whose subsidy ran out and who didn’t pay the full premium a second chance to opt for coverage. For example, a beneficiary whose nine months of subsidized coverage ran out Nov. 30 and who didn’t pay the regular unsubsidized December premium could pay the 35% premium share in January and receive coverage for December. The legislation would require employers to notify current COBRA beneficiaries and future beneficiaries of the new 15-month premium subsidy. Next Step H.R. 3226, The Department of Defense Appropriations Act, has been fast-tracked and is expected to be quickly passed by the Senate To view the text of the bill, click here. 12/2/2009 The Department of Labor has provided guidance about year-end issues involving the COBRA subsidy. Representatives from the Employee Benefits Security Administration had explained on numerous calls that an individual who experienced an involuntary termination of employment and loss of coverage on or before 12/31/09 was eligible for the COBRA subsidy. The Department of Labor has now indicated this is not the case. Q1: If an employee is involuntarily terminated no later than December 31, 2009, but the qualified beneficiary is not eligible for COBRA until on or after January 1, 2010, is the qualified beneficiary eligible for ARRA premium assistance? No. Under ARRA, an assistance eligible individual is a qualified beneficiary as the result of an involuntary termination that occurred during the period from September 1, 2008, through December 31, 2009, is eligible for COBRA continuation coverage at any time during that period, and elects the COBRA continuation coverage. An individual who does not become eligible for COBRA until after December 31, 2009 does not meet the qualifications to be an Assistance Eligible Individual and would therefore be ineligible for the ARRA premium assistance. Please note that this is the correct information based on the current law; however, there is pending legislation that could extend the ARRA premium assistance. Q2: My plan has told me that ARRA expires or stops on December 31, 2009. If I am an assistance eligible individual who was involuntarily terminated no later than December 31, 2009 and became eligible for COBRA no later than December 31, 2009, can I still receive the full 9 months of ARRA premium assistance? Yes. Assistance eligible individuals are entitled to receive the full 9 months of premium assistance as long as they remain eligible. For example, if an assistance eligible individual started COBRA on November 1, 2009, they would be entitled to 9 months of ARRA premium assistance from November 1, 2009 through July 31, 2010 as long as they remained eligible. Please note that this is the correct information based on the current law; however, there is pending legislation that could extend the ARRA premium assistance 12/1/2009 COBRA subsidy extension considered. Both the House and Senate are considering extending the COBRA subsidy under the American Recovery and Reinvestment Act of 2009. (See text of both the House and Senate bill on the right side of this page).
	COBRA News 11/30/2009


	COBRA Subsidy to End for Millions. Millions of jobless Americans face a huge increase in health insurance costs, due to the expiration Monday of a government subsidy that had been provided through the Obama administration's stimulus package, the Los Angeles Times reports. The American Recovery and Reinvestment Act, enacted in February, launched a temporary, $25 billion program to let the unemployed stay on their former employers' health plans for up to nine months after a layoff, but the money is running out and Congress is unlikely to extend it soon. If the Cobra subsidy--an acronym for the 1985 law that authorized the insurance--isn't extended, hundreds of thousands will lose the subsidy each month, forcing them to pay health insurance premiums that are three times higher than what they're now paying. President Barack Obama wants to extend the subsidies, an administration spokeswoman said, and some Democrats are pushing to include an extension in legislation that party leaders are developing to boost job growth. But few believe Congress will be able to pass a jobs bill before year's end, mainly because the Senate is locked in a debate on broader health insurance reform. There is no indication yet whether any extension would be retroactive, helping people who lose the subsidy.


	Legislative Update


	12/1/2009 The House and Senate are considering an extension of the COBRA subsidy. See the text of the latest proposed legislation below. Current bills under consideration: House Bill HR 3930(2) and 3966(3) Senate Bill S. 2730(4).

	Senate Version of the COBRA Extension: S 2730 IS 111th CONGRESS 1st Session S. 2730 To extend and enhance the COBRA subsidy program under the American Recovery and Reinvestment Act of 2009. IN THE SENATE OF THE UNITED STATES NOVEMBER 4, 2009 Mr. BROWN (for himself and Mr. CASEY) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To extend and enhance the COBRA subsidy program under the American Recovery and Reinvestment Act of 2009. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ‘COBRA Subsidy Extension and Enhancement Act of 2009’. SEC. 2. EXTENSION OF COBRA SUBSIDY PROGRAM. (a) Amount of Required Contribution- Section 3001(a)(1)(A) of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) is amended by striking ‘35 percent’ and inserting ‘25 percent’. (b) Coverage Under Retiree Plans- Section 3001(a)(2)(A)(i) of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) is amended by inserting ‘coverage under retiree group health plan,’ after ‘Code of 1986),’. (c) Extension of Coverage- Section 3001(a)(2)(A)(ii) of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) is amended-- (1) in subclause (I), by striking ‘9 months’ and inserting ‘15 months’; (2) in subclause (II), by strike ‘or’ at the end; (3) in subclause (III), by striking the period and inserting ‘; or’; and (4) by adding at the end the following: ‘(IV) December 31, 2010.’. (d) Assistance Eligible Individuals- Section 3001(a)(3) of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) is amended-- (1) in subparagraph (A), by striking ‘December’ and all that follows through ‘is eligible’ and inserting ‘June 30, 2010, such qualified beneficiary is or will be eligible, in the next 31 days,’; and (2) in subparagraph (C), by inserting ‘or reduction in hours (for purposes of a qualifying event based on a reduction in hours shall only apply to individuals whose reduction in hours was involuntary and occurred on or after the date of enactment of the COBRA Subsidy Extension and Enhancement Act of 2009, except that this parenthetical shall not apply to an employee whose involuntary reduction in hours occurred prior to such date of enactment and is covered by COBRA continuation coverage on such date of enactment) of the covered employee’ after ‘employment’. (e) Effective Dates and Transition- (1) EFFECTIVE DATES- (A) IN GENERAL- Except as provided in subparagraph (B), the amendments made by this section shall be effective as if included in the enactment of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5). (B) SPECIAL EFFECTIVE DATE- The amendment made by-- (i) subsection (a) shall take effect on the date of enactment of this Act and shall apply beginning with the first premium payment made by an assistance eligible individual under section 3001 of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) after such date of enactment; and (ii) subsection (b) shall take effect on the date of enactment of this Act. (2) TRANSITIONAL RULE- (A) IN GENERAL- In the case of an individual described in subparagraph (B), under rules established jointly by the Secretaries of Health and Human Services, Treasury, and Labor, the individual may elect to continue and extend COBRA continuation coverage as provided under section 3001 of division B of the American Reinvestment and Recovery Act of 2009, through an election similar to the election permitted under section 3001(a)(4)(A) of such division B. In no case shall the extended period of continuation under this paragraph exceed 3 months. (B) INDIVIDUAL DESCRIBED- An individual described in this subparagraph is an individual whose COBRA continuation coverage-- (i) is described in such section 3001; (ii) expired by virtue of reaching the maximum required period of continuation coverage before the date of the enactment of this Act; and (iii) would, but for the application of such maximum required period of such continuation coverage, have continued after such date.
	House Version of the COBRA Subsidy Extension IN THE HOUSE OF REPRESENTATIVES OCTOBER 29, 2009 Mr. CARSON of Indiana introduced the following bill; which was referred to the Committee on Education and Labor, and in addition to the Committees on Ways and Means and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the American Reinvestment and Recovery Act of 2009 to extend for 6 months the period of eligibility for COBRA premium assistance under such Act.Comments Permalink Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. 6-MONTH EXTENSION OF ELIGIBILITY PERIOD FOR COBRA PREMIUM ASSISTANCE UNDER ARRA. Section 3001(a)(3)(A) of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) is amended by striking ‘December 31, 2009’ and inserting ‘June 30, 2010’.

Copyright © 2009-2010 CobraAid, Inc. All Rights Reserved.