Comments on: FAQs for Workers and their Families

By: basusacobra

basusacobra — Sun, 16 Aug 2009 15:21:08 +0000

We hope the following excerpt from our blog posting on February 26, 2009, link: http://cobracontrol.com/regulations/economic-stimulus-bill-pre-presidential-signing/cobra-facts-premium-reduction/ answers your question:

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:

• is eligible for COBRA continuation coverage at any time between September 1, 2008 and December 31, 2009;

• elects COBRA coverage; and

• is eligible for COBRA as a result of the employee’s involuntary termination between September 1, 2008 and December 31, 2009.

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 prior to February 17, 2009.

ARRA treats assistance eligible individuals who pay 35 percent of their COBRA premium 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. If the credit amount is greater than the taxes due, the Secretary of the Treasury will directly reimburse the employer, insurer or plan for the excess.

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 starts on March 1, 2009 for plans that charge for COBRA coverage on a calendar month basis. The premium reduction for an individual ends upon eligibility for other group coverage (or Medicare), after 9 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.

Special COBRA Election Opportunity: Individuals involuntarily terminated from September 1, 2008 through February 16, 2009 who did not elect COBRA when it was first offered OR who did elect COBRA, but are no longer enrolled (for example because they were unable to continue paying the premium) have a new election opportunity. This election period begins on February 17, 2009 and ends 60 days after the plan provides the required notice. This special election period does not extend the period of COBRA continuation coverage beyond the original maximum period (generally 18 months from the employee’s involuntary termination). COBRA coverage elected in this special election period begins with the first period of coverage beginning on or after February 17, 2009. This special election period opportunity does not apply to coverage sponsored by employers with less than 20 employees that is subject to State law.

Notice: Plan administrators must provide notice about the premium reduction to individuals who have a COBRA qualifying event during the period from September 1, 2008 through December 31, 2009. Plan administrators may provide notices separately or along with notices they provide following a COBRA qualifying event. This notice must go to all individuals, whether they have COBRA coverage or not, who had a qualifying event from September 1, 2008 through December 31, 2009.

Individuals eligible for the special COBRA election period described above also must receive a notice informing them of this opportunity. This notice must be provided within 60 days following February 17, 2009.

By: Mark Sartell

Mark Sartell — Wed, 17 Jun 2009 00:41:04 +0000

I was discharged from my last full-time position on 9/26/08, and I opted to decline COBRA coverage at that time for financial reasons. I subsequently purchased two short-term temporary health policies which covered my family and me through 3/30/09. It was near the end of March before I leared about the premium subsidy for COBRA as a result of ARRA. However, I had not yet received notification of my eligibility for the premium subsidy by the time that I had to renew short-term healthcare coverage to avoid a gap in coverage. I subsequently purchased a 90-day temporary policy from Blue Cross for April, May and June. Premium for this policy was due at the inception of coverage on 4/1/09. I finally received official notice of my eligibility for the premium subsidy from our COBRA administrator on April 19, 2009. I subsequently elected to enroll in the extended COBRA coverage and signed my enrollment form on May 26, 2009. I understand that the extended COBRA coverage with its related premium subsidy dates back to 2/17/09, but my question is: “Why am I being billed retroactively for the premium due from 2/17/09 forward when I did not have COBRA coverage for the months of February, March, April and May and in fact had other private health coverage for which I paid premium? If I elected to take COBRA on 5/26/09, why can’t I pay premium (at the subsidized level of 35%) from May forward to the end of the nine-month premium subsidy period? I postponed many needed healthcare and dental treatment procedures during the period of my private insurance coverage due to the fact that I had high-deductible plans and would therefore had to have eaten all of the cost. By the way, I have been unemployed since 9/26/09 and therefore am trying to save on healthcare costs as much as possible. Can someone comment on the requirement to pay COBRA premiums retro to 2/17/09? I have seen nothing about this question in any of the information on the DoL’s website or on my COBRA administrator’s website? Thank you very much for your assistance.

By: basusacobra

basusacobra — Tue, 14 Apr 2009 21:31:23 +0000

If you are still employed with the employer who elimminated your coverage, you would not be deemed to have had an involuntary termination. Involuntary termination referes to situations where the employer dismissed you from employment (i.e., fire, layoff, etc.).

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.

By: kevi

kevi — Wed, 01 Apr 2009 14:45:57 +0000

My employer recently decided to cut cost by eliminating health care coverage for my position, but made COBRA available to me. Does this count as “involuntary termination?”

By: basusacobra

basusacobra — Fri, 06 Mar 2009 15:06:09 +0000

Linda, since your COBRA was not processed through our firm’s services, we cannot give you specific guidance. However, generally, we find employers who choose to provide funding of a former employee’s COBRA premium for some period of time (i.e., an offset), require the former employee to elect, in writing, COBRA first, in order to receive such premium offset.

Once the former employee has made his/her election and the employer’s premium supplemental funding runs out (e.g., after the 6-months you described), the former employee would be responsible for picking up the premiums, thereafter and for the remainder of the COBRA coverage duration, without having to complete any additional paperwork. If the former employee is elibile for the premium subsidy, it seems that such subsidy would be avialable for the lesser remainder ot the premium subsidy period or the end of the former employee’s COBRA coverage. However, you will need to contact your employer or their administrator about their specific requirements.
The premium subsidy is only available if the COBRA coverage start date was/is on or after September 1, 2008. Therefore, the premium subsidy would not be applicable in your situation. Please refer to the following text from the Department of Labor:
An assistance eligible individual is a COBRA “qualified beneficiary” who meets all of the following requirements:
- Is eligible for COBRA continuation coverage at any time during the period beginning September 1, 2008 and ending December 31, 2009;
- Elects COBRA coverage (when first offered or during the additional election period), and
- Has a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.

By: Linda Vaillette

Linda Vaillette — Thu, 05 Mar 2009 23:10:49 +0000

I was recently terminated by my employer and was the one carrying the family’s health insurance. My former employer is going to pay 100% of the COBRA premiums for 6 months, but I am unsure of what my options are at the end of that time period. Should I be completing COBRA paperwork now or wait until the end of the six months? Will I be eligible for the 35% premium payment when I assume payments, or will I be disqualified because my wife’s company offers health insurance (even though she declined coverage at the last open enrollment)? If I am going to be disqualified, what date will be used as a qualifying event in order for my wife to enroll in her company’s health plan —- the date of my actual termination, or the end of the six months that my former employer is paying for COBRA? We have a newborn and I want to make sure we maintain health coverage.