Reminder re: COBRA and the 65% premium reduction

[Duer 157099]

Remember hearing about this in the stimulus plan?

Well, here are some details for those affected/interested:

Q1: What is the new COBRA subsidy provision contained in the stimulus package signed by the President?
The stimulus package, which was enacted as the American Recovery and Reinvestment Act of 2009 (ARRA) temporarily reduces the premium for COBRA coverage for eligible individuals. COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) allows certain people to extend employer-provided group health coverage, if they would otherwise lose the coverage due to certain events such as divorce or loss of a job.

Individuals who are eligible for COBRA coverage because of their own or a family member's involuntary termination from employment that occurred from September 1, 2008 through December 31, 2009 and who elect COBRA, may be eligible to pay a reduced premium. Eligible individuals pay only 35% of the full COBRA premiums under their plans for up to 9 months. The employer (or other responsible entity) may recover the remaining 65% of the premium by taking the subsidy amount as a credit on its quarterly employment tax return. This premium reduction is generally available for continuation coverage under the Federal COBRA provisions, as well as for group health insurance coverage under state continuation coverage laws.

If the individual was offered Federal COBRA continuation coverage as a result of an involuntary termination of employment that occurred at any time from September 1, 2008 through Feburary 16, 2009, and that individual declined to take COBRA at that time, or elected COBRA and later discontinued it, he/she may have another opportunity to elect COBRA coverage and pay a reduced premium.

more at links below

http://www.dol.gov/PrinterFriendly/PrinterVersion.aspx?url=http://www.dol.gov/ebsa/newsroom/fsCOBRApremiumreduction.html

http://www.dol.gov/PrinterFriendly/PrinterVersion.aspx?url=http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionER.html

http://www.dmhc.ca.gov/dmhc_consumer/hp/hp_cobra.aspx

[mnmoderatedem]

1. is everyone eligible for this, and when does it start?

I'm on COBRA due to being laid off on Feb 13th. Does everone on COBRA get the discount, and when is the discount effective? Anyone know?

My local COBRA office doesn't know any more about this than I do.

[Larkspur]

3. Yes you qualifiy if you were laid off on Feb. 13, 2009

Individuals who are eligible for COBRA coverage because of their own or a family member's involuntary termination from employment that occurred from September 1, 2008 through December 31, 2009 and who elect COBRA, may be eligible to pay a reduced premium. Eligible individuals pay only 35% of the full COBRA premiums under their plans for up to 9 months. The employer (or other responsible entity) may recover the remaining 65% of the premium by taking the subsidy amount as a credit on its quarterly employment tax return. This premium reduction is generally available for continuation coverage under the Federal COBRA provisions, as well as for group health insurance coverage under state continuation coverage laws.

Check with your employer's HR department. Your company will pay the remainder and get a tax credit for it.

[Duer 157099]

4. You should check those links out, but it looks like you'd be covered

The reduction is effective Feb 17th, so if you've elected for COBRA, you'll likely get whatever premium you've paid prorated (eventually - once they get all the paperwork done). In the meantime, full premiums should be paid to keep you current. They even have an allowance for people who declined COBRA because they couldn't afford the premium, looks like they'll get a 2nd chance to elect it - again, if they meet the criteria.

But take a look at the links to see the nuances and specifics

Changes Regarding COBRA Continuation Coverage Under ARRA

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.
Text

[sailor65]

2. Thanks for the links

I fear we may need this one soon.......