July 2010 – COBRA Premium Subsidy Expires
The American Recovery and Reinvestment Act of 2009 (ARRA) provided a temporary subsidy for the cost of COBRA continuation Indiana health insurance coverage for certain individuals who were involuntarily terminated from employment. Initially available to individuals whose employment was involuntarily terminated between September 1, 2008 and December 31, 2009, the COBRA premium subsidy was extended several times. Most recently, The Continuing Extension Act of 2010 extended the eligibility period through May 31, 2010.
A number of proposals to further extend the subsidy have been considered but none have been passed. The recent Unemployment Compensation Extension Act of 2010, signed by the President on July 22, 2010, did not extend the COBRA premium subsidy.
Department of Labor Statement
On July 6, 2010, the Department of Labor addressed the expiration of the subsidy in the following statement:
“ARRA provides a COBRA premium reduction for eligible individuals who are involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare.
“Unless the sunset date is extended by Congress, individuals who lose their jobs after May 31, 2010 will not be eligible for the subsidy.
“Individuals who believe they have been incorrectly denied the subsidy may request the Employee Benefits Security Administration (EBSA) review their denial and issue a determination within 15 business days. The application to request a review is available at www.dol.gov/COBRA.”
The expiration of the subsidy means plan administrators will have to go back to using prior versions of the COBRA notices. Individuals who are entitled to either the COBRA general notice or COBRA election notice after May 31, 2010 should receive the same version of the COBRA notice sent by the plan administrator prior to the enactment of the subsidy. For example, if an employer terminates an employee on June 10, 2010, and as a result of such termination the employee loses health coverage, the plan administrator should provide the individual with the COBRA election notice that does not include information about ARRA or the COBRA premium subsidy. The DOL has posted links to its pre-ARRA model notices at www.dol.gov/COBRA. Group Insurance Services has a partnership with several COBRA Administrators, and we provide this resource to our clients.
We will continue to monitor any developments related to the COBRA premium subsidy and will keep you informed.
Group Insurance Services of Fort Wayne, Inc. provides those employers who must comply with the complex Consolidated Omnibus Budget Reconciliation Act (COBRA) regulations with all the compliance help they need. As DOL, ERISA, TAMRA, OBRA and other regulatory areas make changes to the COBRA law, you’ll be protected and well informed.
In February 2009, the passing of the American Recovery and Reinvestment Act of 2009 (ARRA) brought about a major change to the COBRA law. In particular, it provided a second election opportunity for employees who were involuntarily terminated from employment (from a COBRA compliant employer) as early as September 1, 2008. Additionally, it provided for a subsidy for the payment of the applicable COBRA premiums.
Michelle Walters is our resident COBRA professional. For further information, please contact her at: email@example.com. She will explain to you what your obligation is regarding these complex COBRA matters. Although Group Insurance Services does not conduct ongoing COBRA administration, we provide several off-site resources at no cost to our clients. Don’t hesitate to call today!