During the week of February 23, 2009, the following letter will be distributed to COBRA Continuants enrolled in their former employers’ COBRA coverage, with a COBRA coverage effective date on or after September 1, 2008 (and on or before December 31, 2009), and of record with COBRA Control Services, LLC, in preparation for changes required by The American Recovery and Reinvestment Act of 2009.
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As you may know, President Obama signed into law on February 17, 2009 The American Recovery and Reinvestment Act of 2009 (ARRA). Title III of ARRA provides a partial subsidy of COBRA premiums for eligible individuals. There are certain requirements that must be met in order to receive the subsidy.
- You must have become eligible for COBRA continuation coverage on or after September 1, 2008 (and before December 31, 2009);
- The qualifying event which entitled you to elect COBRA continuation coverage must have been an employee’s involuntary termination of employment that occurred on or after September 1, 2008 (and before December 31, 2009); and
- You must elect COBRA.
If you meet these requirements, you may be able to take advantage of the new COBRA subsidy. Please note that there are certain income limitations on eligibility for the subsidy. Generally, if your taxable income is $145,000 or greater (or your combined income with your spouse is $290,000), you may not take advantage of the subsidy. Additionally, the full amount of the subsidy begins to be phased out if your income is $125,000 or greater ($250,000 or greater in the case of a joint tax return).
The subsidy will be 65% of the premium amount you would otherwise pay for COBRA continuation coverage. This means that you will pay out of pocket only 35% of the cost of COBRA continuation coverage. The subsidy will be effective for the coverage period beginning March 1, 2009 and can continue for a maximum of 9 months (or the end of your COBRA coverage period, if earlier). The subsidy will apply to all COBRA eligible coverage except a Flexible Spending Account,
If you are eligible for the subsidy, you do not need to do anything to enroll to receive the subsidy. Automatically, we will issue you new premium payment coupons incorporating the subsidy as a new line item credit against your full premium due. Thus, beginning March 1, you will be responsible for only 35% of the eligible COBRA premium plus the premium due for a flexible spending account, if any.
If you are not eligible for the subsidy, we will provide you with a letter to this effect. The letter will explain how to appeal your position.
We are working diligently to modify our COBRA programs to accommodate the changes required by ARRA. Since the law just came into effect, it is unlikely that we will be able to deliver to you revised billing coupons prior to March 1, 2009. However, we anticipate being able to do so by the end of the first week in March, if you are eligible for the subsidy.
In the event that you pay your March 2009 COBRA premium in full prior to receiving revised premium payment coupons incorporating the subsidy, a credit for the amount you overpay will be carried forward to future months’ premiums due.
If you discontinue your COBRA coverage or your COBRA coverage ends early prior to the time you recoup the amount you overpay, we will refund to you any amounts due.
Since the ARRA provides new rules regarding COBRA and since the government has not yet issued official regulatory guidance, we reserve the right to modify the information presented herein and make restatements as such guidance or other information becomes available.
The information contained herein is for informational purposes only and is not intended as legal advice, nor is it intended to advise you of your obligations under the American Recovery and Reinvestment Act of 2009.
Sincerely,
COBRA Control Services, LLC
Filed under: Administration, American Recovery and Reinvestment Act of 2009, COBRA, Economic Stimulus, Legislation, Notices, Regulations
