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News

Department of Employee Trust Funds
April 20, 2010 (updated)

COBRA Subsidy Extension through May, 2010

The “Continuing Extension Act of 2010 (H.R. 4851)” (CEA) was signed into law on April 15, 2010. This extends the eligibility period for the premium subsidy for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) as provided under the American Recovery and Reinvestment Act of 2009 (ARRA) as amended by the federal Department of Defense Appropriations Act, 2010.

Notable changes provided under CEA include:

  • The time period in which the qualifying event (i.e., involuntary termination) must occur has been extended from March 31, 2010, to May 31, 2010.
  • An involuntary termination of employment that occurs on or after April 1, 2010 but by May 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through May 31, 2010 is also a qualifying event for purposes of ARRA.

The Department of Employee Trust Funds (ETF) will be issuing an employer bulletin on this topic. Note that federal legislation has been introduced to extend the COBRA premium subsidy for involuntarily terminated workers through December 31, 2010. ETF will continue to alert employers of COBRA premium subsidy extensions and changes through employer bulletins.

For more information, refer to the United States Department of Labor web site.


March 8, 2010 (updated)

COBRA Subsidy Extended Again

The federal Temporary Extension Act of 2010 (Act), signed into law on March 2, 2010, extends the eligibility period for the premium subsidy for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) as provided under the American Recovery and Reinvestment Act of 2009 (ARRA) as amended by the federal Department of Defense Appropriations Act, 2010.

Notable changes provided under the Act include:

  • The time period in which the qualifying event (i.e., involuntary termination) must occur has been extended from February 28, 2010, to March 31, 2010.
  • An involuntary termination of employment that occurs on or after March 2, 2010 but by March 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through March 31, 2010 is also a qualifying event for purposes of ARRA.
  • There is a new election period for individuals who did not make (or who made and discontinued) an election of COBRA coverage on the basis of the reduction of hours of employment who later have an involuntary termination of employment that occurs on or after March 2, 2010 but by March 31, 2010. The period of COBRA coverage is determined as though the qualifying event were the reduction of hours of employment although the COBRA coverage is available from the qualifying event of the involuntary termination of employment.
  • Plan sponsors or health insurers are subject up to a $110 per day penalty for failure to comply.

The Department of Employee Trust Funds (ETF) will be issuing an employer bulletin on this topic. Note that federal legislation has been introduced to extend the COBRA premium subsidy for involuntarily terminated workers through December 31, 2010. ETF will continue to alert employers of COBRA premium subsidy extensions and changes through employer bulletins.

For more information, refer to the United States Department of Labor web site.


January 21, 2010

Notice Requirements Regarding COBRA Extension

The Department of Employee Trust Funds (ETF) is developing an employer bulletin explaining the extension to the COBRA premium reduction provisions that are available under the American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Department of Defense Appropriations Act, 2010, (Act). However, to assist employers in complying with the deadlines for providing notice to individuals, especially to those individuals who are in a transition period (see the last bullet below), ETF is providing you with this information in advance of the bulletin.

The Act requires employers to provide notice to certain individuals. ETF developed a notice to meet these requirements. Note that you must fill-in information in the notice and print the first page on your letterhead before issuing. Pursuant to the Act, employers must issue this notice to:

  • Individuals who were “assistance eligible individuals” (AEI) as of October 31, 2009, and individuals who experienced a termination of employment on or after October 31, 2009. This notice must be provided by February 17, 2010.
  • All qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time from September 1, 2008 through February 28, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice.
  • AEIs who are in a “transition period.” A transition period is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. An AEI is in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and they otherwise remain eligible for the premium reduction. This notice must be provided within 60 days of the first day of the transition period. For example, AEIs who exhausted their nine months of premium reduction as of November 30, 2009 and who otherwise remain eligible for the premium reduction must be provided the notice by January 29, 2010.

More information about the ARRA is available on the DOL Internet site, including FAQs on the premium reduction extension. ETF expects to issue an employer bulletin on this topic by the end of next week.


December 23, 2009 (updated)

COBRA Subsidy Law Extended

The federal Fiscal Year 2010 Department of Defense Appropriations Act (Act), signed into law on December 19, 2009, extends and expands the premium subsidy for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) as provided under the American Recovery and Reinvestment Act of 2009 (ARRA).

Notable changes provided under the Act include:

  • The amount of time an assistance eligible individual (AEI) can receive the subsidy increases from nine to 15 months.
  • The time period in which the qualifying event (i.e., involuntary termination) must occur has been extended from December 31, 2009, to February 28, 2010.
  • The Act clarifies that eligibility for the subsidy is based on the date of the qualifying event (i.e., involuntary termination of employment), not the date the individual becomes eligible for COBRA coverage.
  • Employers are required to send notices within 60 days from the enactment of this law to:
    • AEIs that experienced a qualifying event (i.e., involuntary termination of employment) on or after October 31, 2009, and
    • AEIs whose eligibility for the subsidy has expired.
  • AEIs whose eligibility for the premium subsidy has expired before the Act was signed into law can maintain their COBRA coverage.
    • If the AEI paid the full premium for coverage during this transitional period, the AEI will receive reimbursement for premium paid in excess of the amount required to be paid or a credit towards future premium payments that are required under this law.
    • If premium has not been paid for coverage during this transitional period, the AEI has 60 days from the enactment of this law or 30 days from the date of notification from the employer, whichever is later, to pay his or her portion of the premium and it will be considered to be timely.

For more information, refer to the United States Department of Labor web site at COBRA Continuation Coverage Assistance Under The American Recovery And Reinvestment Act Of 2009. In addition, the Department of Employee Trust Funds will be issuing an employer bulletin on this topic.

 

Recent COBRA Changes Affect Employers and Employees

The American Recovery and Reinvestment Act of 2009 (ARRA), signed into law on February 17, includes several important changes to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Specifically, the law provides for a subsidy for the COBRA premium and additional election opportunities.

MEMBERS: You may be eligible for the subsidy for your COBRA premium if you have an involuntary termination of employment that occurs between September 1, 2008 and December 31, 2009. If you had an involuntary termination of employment from September 1, 2008 through February 16, 2009 or had a qualifying event for which your employer provided you with a continuation election form on or after February 17, 2009, you will receive a notification from your former employer explaining your enrollment and subsidy eligibility. To apply for the subsidy, you must then submit your completed notification form to your former employer, who will determine your eligibility for the subsidy. If your employment was involuntarily terminated between September 1, 2008 and February 17, 2009, your former employer must provide you with the notification by April 18, 2009.

EMPLOYERS: The Department of Employee Trust Funds published an Employer Bulletin describing your responsibilities for complying with administration of the COBRA subsidy. The Bulletin includes the notification you must provide to affected employees.

More information about the ARRA is available on the DOL Internet site: http://www.dol.gov/ebsa/cobra.html.

 

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