COBRA Control Services, LLC » Economic Stimulus

COBRA Subsidy Extension Signed Into Law

basusacobra — Thu, 04 Mar 2010 03:57:15 +0000

On March 2, 2010, the U.S. Senate passed H.R. 4691, the Temporary Extension Act of 2010 by a vote of 78-19. This Senate action follows House passage of H.R. 4691 on February 25, 2010. The President immediately signed this bill into law on March 2, 2010.

The Temporary Extension Act extends the COBRA subsidy program that was enacted under the American Recovery and Reinvestment Act.

The law’s COBRA provisions:

Extend the eligibility period for the 15-month 65 percent premium subsidy to those involuntarily terminated from March 1 through March 31, 2010.

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 bill.

The information contained herein is for informational purposes only and is not intended as legal or tax advice, nor is it intended to advise you of your obligations under ERISA, COBRA, HIPAA or the American Recovery and Reinvestment Act of 2009. It should not be used or relied upon as the basis for any action or choosing inaction. Consult an experienced benefits attorney or tax professional about your specific situation before deciding on any course of action or inaction.

COBRA Extension Bill Introduced

basusacobra — Tue, 03 Nov 2009 14:12:36 +0000

Representative Joe Sestak (D-PA), a member of the House of Representatives Education and Labor Committee, introduced the Extended COBRA Continuation Protection Act (H.R. 3930) on October 26, 2009. The measure would amend the American Recovery and Reinvestment Act of 2009 (ARRA) to extend the eligibility period and maximum period for COBRA premium assistance. Currently, eligibility for the nine-month subsidy is limited to individuals who have been involuntarily terminated from employment on or after September 1, 2008, through December 31, 2009 and who lose coverage during that period.

Specifically, H.R. 3930 would extend the ARRA COBRA subsidy eligibility to those who are involuntarily terminated between January 1 and June 30, 2010 and extend the maximum period of assistance to 15 months.

H.R. 3930 also includes a six-month extension of COBRA coverage. For individuals who are eligible for COBRA as a consequence of termination (or reduction in hours) of employment “occurring on or after April 1, 2008 and before January 1, 2010, if the maximum required period of COBRA continuation coverage is 18 months, such period is extended to 24 months.” The Council is seeking clarification of this legislative language, however, as the time frame for eligibility for this six month extension is inconsistent with timeframes that appear in the introduction to the bill and other section headings.

This measure could be included as part of comprehensive health care reform legislation, currently pending in both chambers of Congress or in legislation extending unemployment benefits and other expiring provisions of the stimulus legislation. H.R. 3200, the Affordable Health Care for America Act in the House already includes a provision extending the duration of COBRA coverage.

Seminar PowerPoints

basusacobra — Wed, 25 Mar 2009 18:49:57 +0000

Overview of The American Recovery & Reinvestment Act of 2009 Seminar PowerPoint Deck:

Seminar Date: 3.24.2009 arra-presentation-2

Statement of Secretary of Labor Hilda L. Solis on COBRA subsidy under American Recovery and Reinvestment Act of 2009

basusacobra — Fri, 20 Mar 2009 02:03:08 +0000

Release Date: March 19, 2009
Release Number: 09-301-NAT
Contact Name: Gloria Della
Phone Number: 202.693.8666

Statement of Secretary of Labor Hilda L. Solis on COBRA subsidy under American Recovery and Reinvestment Act of 2009

Washington – Secretary of Labor Hilda L. Solis today issued the following statement regarding the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the premium reduction under the American Recovery and Reinvestment Act (ARRA):

“America’s workers and employers are the most productive in the world. With the labor and capital markets under financial stress, the Obama Administration is working to provide relief to American families. In February, the President signed into law the American Recovery and Reinvestment Act to create jobs, provide training opportunities for new jobs, extend unemployment benefits and help relieve the burden of health benefits.

“These programs are vitally important to the economic well-being of people who lost their jobs. Right now the federal government is beginning to implement the law to meet some of the basic needs of its citizens.

“The ARRA provides a 65 percent tax subsidy for the cost of health benefits, making them more affordable for the unemployed and their families. Millions of individuals, including those who previously declined employer-provided coverage under COBRA, will be eligible to receive a subsidy on their premiums for up to nine months.

“Today the Labor Department is publishing more information to help the public understand how the program works and how they can qualify for the premium subsidy for continuation of health coverage under private, state and federal programs. The model notices we are releasing enable employers to quickly spell out for former employees and their families how to take advantage of COBRA coverage and the subsidy.

“This administration is committed to putting Americans back to work so they can re-build the financial fabric of their lives. And the Labor Department is working quickly to make that happen.”

Additional information is available at www.dol.gov/COBRA.

U.S. Department of Labor news releases are accessible on the Department’s Newsroom page. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at 202.693.7828 or TTY 202.693.7755. The Labor Department is committed to providing America’s employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department’s Compliance Assistance page.

Reader Claims www.CobraControl.com has Best COBRA Information

basusacobra — Sun, 01 Mar 2009 16:44:13 +0000

A recent www.CobraControl.com site visitor wrote: “This is the best information I have found so far on this subject on the internet, thank you for that. My question is, what if the business is no longer paying any payroll taxes at all, as it has laid off all employees (who are eligible for COBRA) and is just down to the principal partners (who are not taking a salary at this point)? Will the IRS refund the 65% that the employer is expected to pay? Can the employer get the money monthly or will it have to wait for the end of the quarter?

Since this is one of the most frequently asked questions to our call center, we thought it was worth highlighting it with this blog entry as follows:

It appears that the revised Form 941 provides in line 15 a place to identify your credit amount and note whether you want to apply the credit to the next return or to have the IRS send you a refund.

Specifically, Form 941 Instructions state on page 6, Item 15 Overpayment: “If line 13 is more than line 10, write the difference in line 15. Never make an entry in both lines 14 and 15.

If you deposited more than the correct amount for the quarter, you can choose to have the IRS either refund the overpayment or apply it to your next return. Check the appropriate box in line 15. If you do not check either box, we will automatically refund the overpayment. We may apply your overpayment to any past due tax account that is shown in our records under your EIN.

If line 15 is under $1, we will send a refund or apply it to your next return only if you ask us in writing to do so.”

Notice to COBRA Continuants Serviced by Cobra Control Services, LLC

basusacobra — Fri, 20 Feb 2009 22:22:01 +0000

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.

_______________

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

Summary of the American Recovery and Reinvestment Act of 2009 with Respect to COBRA

basusacobra — Wed, 18 Feb 2009 01:32:44 +0000

The American Recovery and Reinvestment Act of 2009 (a.k.a. The Economic Stimulus Bill) hereafter referred to as “ARRA” will have a significant impact on COBRA.

The ARRA makes substantial, but temporary, changes to the rules governing the continuation of health coverage under COBRA and a number of other modifications affecting welfare benefit plans. BAS/CCS is working quickly to incorporate these changes into its processing, notification, billing, remittance, and reporting services.

Benefit Allocation Systems, Inc, (BAS) and Cobra Control Services, LLC (CCS) have begun to prepare to assist you with new notice, billing, and reporting requirements.

The ARRA aims to make health coverage more affordable for employees who lose their jobs by lowering the cost of COBRA coverage for many individuals. Any qualifying individual whose employment is involuntarily terminated between September 1, 2008, and December 31, 2009, and who is eligible for continuation coverage under COBRA because of the termination will be able to continue health coverage at only 35 percent of the ordinary COBRA premium for up to nine months.

Employers (and, in certain cases, insurers) will subsidize the remaining 65 percent, but have the right to recover the subsidy amount from the federal government through a credit on their payroll tax deposits.

Affected Plans. The new subsidy rules apply to plans that are subject to COBRA, certain federal government plans, and plans that are exempt from COBRA but subject to comparable requirements for health coverage continuation under state law. For convenience, this bulletin refers to the continuation of coverage under all of these plans as COBRA coverage. Health flexible spending arrangements provided through a cafeteria plan are exempt from the requirements.

Discount Period. The discount period begins with the first month of coverage after the ARRA is signed into law and lasts up to nine months, but may be shorter. The ARRA does not extend the maximum period of COBRA coverage beyond its ordinary expiration date. The discount will end when the COBRA coverage itself ends. In addition, the discount will end when an individual becomes eligible for coverage under Medicare or another group health plan (other than a plan that offers certain types of limited benefits, such as a dental plan or health flexible spending account). The ARRA applies penalties against individuals who fail to provide appropriate notice when they become eligible for other coverage.

Second Chance to Elect. Those who are eligible for the discount, but who did not previously elect COBRA coverage must be afforded a period of at least 60 days to elect continuation coverage. The coverage will be effective as of the first day of the month after the ARRA is signed into law (March 1). The maximum period for coverage will be measured from when it would have begun if COBRA had been elected when initially offered.

Notice Requirements. Plan administrators must modify or supplement the COBRA notices they provide when a qualifying event occurs. The notice must include specified information regarding the opportunity for a premium discount. Plan administrators must also alert those who have already elected COBRA and those who are eligible for the discount but have not elected COBRA, of their rights under the ARRA. This notice must be provided within 60 days after the ARRA is signed. The government is required to issue model notices within 30 days of that signature.

This posting is brought to you by Benefit Allocation Systems, Inc. and COBRA Control Services, LLC. 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.

Final Text of the Economic Stimulus Bill

basusacobra — Tue, 17 Feb 2009 01:01:08 +0000

We’ve have the final text of the Economic Stimulus Bill. Read this remarkable piece of legislation for yourself – Go to text

Let us know what your think.

We will be distributing our summary of this Bill’s affect on COBRA, as we prepare to assist our clients with complete services for notices, premium billing, premium collections, premium remittance and compliance reporting, in accordance with this landmark legislation.