COBRA Control Services, LLC » Notices

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

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.

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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

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.