(b) Extension of Maximum Duration of Assistance.—Subsection (a)(2)(A)(ii)(I) of such section is amended by striking “9 months” and inserting “15 months”.

(c) Rules Related to 2009 Extension.—Subsection (a) of such section is further amended by adding at the end the following:

“(16) Rules Related to 2009 Extension.—

“(A) Election to pay Premiums Retroactively and Maintain COBRA Coverage.—In the case of any premium for a period of coverage during an assistance eligible individual’s transition period, such individual shall be treated for purposes of any COBRA continuation provision as having timely paid the amount of such premium if—

“(i) such individual was covered under the COBRA continuation coverage to which such premium relates for the period of coverage immediately preceding such transition period, and

“(ii) such individual pays, not later than 60 days after the date of the enactment of this paragraph (or, if later, 30 days after the date of provision of the notification required under subparagraph (D)(ii)), the amount of such premium, after the application of paragraph (1)(A).

“(B) Refunds and Credits for Retroactive Premium Assistance Eligibility.—In the case of an assistance eligible individual who pays, with respect to any period of COBRA continuation coverage during such individual’s transition period, the premium amount for such coverage without regard to paragraph (1)(A), rules similar to the rules of paragraph (12)(E) shall apply.

“(C) Transition Period.—

“(i) In General.—For purposes of this paragraph, the term ‘transition period’ means, with respect to any assistance eligible individual, any period of coverage if—

“(I) such period begins before the date of the enactment of this paragraph, and

“(II) paragraph (1)(A) applies to such period by reason of the amendment made by section 1010(b) of the Department of Defense Appropriations Act, 2010.

“(ii) Construction.—Any period during the period described in subclauses (I) and (II) of clause (i) for which the applicable premium has been paid pursuant to subparagraph (A) shall be treated as a period of coverage referred to in such paragraph, irrespective of any failure to timely pay the applicable premium (other than pursuant to subparagraph (A)) for such period.

“(D) Notification.—

“(i) In General.—In the case of an individual who was an assistance eligible individual at any time on or after October 31, 2009, or experiences a qualifying event (consisting of termination of employment) relating to COBRA continuation coverage on or after such date, the administrator of the group health plan (or other entity) involved shall provide an additional notification with information regarding the amendments made by section 1010 of the Department of Defense Appropriations Act, 2010, within 60 days after the date of the enactment of such Act or, in the case of a qualifying event occurring after such date of enactment, consistent with the timing of notifications under paragraph (7)(A).

“(ii) To Individuals Who Lost Assistance.—In the case of an assistance eligible individual described in subparagraph (A)(i) who did not timely pay the premium for any period of coverage during such individual’s transition period or paid the premium for such period without regard to paragraph (1)(A), the administrator of the group health plan (or other entity) involved shall provide to such individual, within the first 60 days of such individual’s transition period, an additional notification with information regarding the amendments made by section 1010 of the Department of Defense Appropriations Act, 2010, including information on the ability under subparagraph (A) to make retroactive premium payments with respect to the transition period of the individual in order to maintain COBRA continuation coverage.

“(iii) Application of Rules.—Rules similar to the rules of paragraph (7) shall apply with respect to notifications under this subparagraph”.

(d) Clarification that Eligibility and Notice is Based on Timing of Qualifying Event.—Subsection (a) of such section is amended—

(1) in paragraph (3)(A)—

(A) by striking “at any time” and inserting “such qualified beneficiary is eligible for COBRA continuation coverage related to a qualifying event occurring”; and

(B) by striking “, such qualified beneficiary is eligible for COBRA continuation coverage”; and

(2) in paragraph (7)(A), by striking “become entitled to elect COBRA continuation coverage” and inserting “have a qualifying event relating to COBRA continuation coverage”.

(e) Effective Date.—The amendments made by this section shall take effect as if included in the provisions of section 3001 of division B of the American Recovery and Reinvestment Act of 2009 to which they relate.

(f) Emergency Designations.—

(1) In General.—Amounts in this section are designated as emergency requirements and necessary to meet emergency needs pursuant to sections 403 and 423(b) of S. Con. Res. 13 (111th Congress), the concurrent resolution on the budget for fiscal year 2010.

(2) PAYGO.—All applicable provisions in this section are designated as an emergency for purposes of pay-as-you-go principles.

That’s especially important in Michigan, which continues to have the nation’s highest unemployment rate – 14.7% in November.

Attached to the $636-billion defense spending bill passed on an 88-10 vote by the Senate on Saturday morning, the unemployment extensions now go to President Barack Obama for his signature, which is expected to come quickly.

U.S. Sen. Debbie Stabenow of Michigan said the unemployment extensions and other measures provide help at a time when Michiganders “are struggling to put food on the table, pay heating bills, and afford the health care they need.”

“While recovery from this recession and the creation of jobs cannot come quickly enough, I am relieved Congress was able to pass these important measures to soften the blow of unemployment,” added Michigan’s senior U.S. senator, Carl Levin.

The legislation makes some key changes to programs which were set to expire. For instance:
•The congressional stimulus bill passed in February created a program that paid 65% of monthly insurance premiums for people who lost their employer-based health care coverage because they were laid off. But that program was only open to people who lost their jobs – and their coverage – by the end of 2009. The new bill extends that eligibility deadline by two months, until the end of February 2010.
•It also adds six months to what was a 9-month period that the federal government would make the 65% of payments through the COBRA health plan, extending the period of payments to 15 months.
•The legislation also extends the deadline to qualify for additional unemployment benefits. Last month, Congress passed legislation adding 14 more weeks of emergency benefits – and six more on top of that for people in hard-hit states like Michigan. But they were only available to people exhausting all their other unemployment benefits by the end of December. The new bill extends that deadline to the end of February.
•It also maintains 2009 federal poverty guidelines – which if reset could have moved some people off food stamps and Medicaid – and adds additional funding to the food stamp program.
•Finally, the legislation authorizes the Small Business Association to continue programs to make loans more attractive to borrowers and lenders, in order to free up credit for businesses.

Embedded in H.R. 3326, a measure appropriating funds for the Department of Defense, the nine-month, 65% premium subsidy would be extended by six months to a total of 15 months. It would apply to those who lose their jobs through Feb. 28, 2010. Under current law, employees who lose their jobs after Dec. 31 are ineligible for the subsidy.

The measure, approved on 395-34 vote, also would provide an additional six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

In addition, the legislation would give beneficiaries whose subsidy ran out and who didn’t pay the full premium a second chance to opt for coverage. For example, a beneficiary whose nine months of subsidized coverage ran out Nov. 30 and who didn’t pay the regular unsubsidized December premium could pay the 35% premium share in January and receive coverage for December.

The legislation would require employers to notify current COBRA beneficiaries and future beneficiaries of the new 15-month premium subsidy.

The House also is expected to take up another appropriations bill, H.R. 2847, with a provision that would extend the premium subsidy to those who lose their jobs through June 30, 2010.

The Department of Defense bill, Washington observers say, is on “fast-track” consideration and could be quickly approved by the Senate.

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.

Significant changes are coming to COBRA administration. Currently, the House H.R. 598 and Senate S. 29 are considering proposals that would subsidize coverage and expand the amount of coverage available for older and long-tenured employees. These changes will likely require more complex COBRA administration and updates to initial rights notices, qualifying event notices, and premium collection processes.

Once the COBRA legislation is finalized, Cobra Control Services, LLC will offer free webinars on the COBRA changes and offer detailed guidance for employers.

Highlights of the legislation affecting COBRA include:

 ·         Premium assistance (65 percent of the COBRA premium) for up to 12 months for those who elected COBRA from September 1, 2008, through December 31, 2009. This would apply only to involuntary employment terminations (for reasons other than gross misconduct). The employer would pay this subsidy to the carrier (for fully insured plans) or absorb the subsidy (for self-funded plans) and receive credit for it through reduced payroll taxes.

·         A new 60-day election period would exist for those who did not elect coverage during that time.

·         New notice requirements would take effect.

·         Expanded COBRA coverage would be in place for employment termination or reduction of hours of employment qualifying events for employees who are at least age 55 or had 10 or more years of service. This coverage could continue beyond 18 months until any other termination reason occurs (e.g., Medicare entitlement, failure to pay).

These provisions could significantly increase the percentage of beneficiaries opting for coverage

Cobra Control Services, LLC has begun preparing for these changes on behalf of its COBRA administration clients. We expect the bill could reach President Obama’s desk within the next 15 days.

We will keep you apprised as this legislation’s progresses. For more information, you may contact us at info@cobracontrol.com or 888-887-6187.