COBRA Premium Reduction Third Extension
Congress voted to extend the ARRA subsidy for a third time. On April 15, 2010, President Obama signed HR 4851, The Continuing Extension Act of 2010, into law, which wraps in all of the Temporary Extension Act of 2010’s changes and extends the eligibility deadline for the ARRA subsidy, to May, 31, 2010. To keep this simple, here’s a summary of the whole thing:
Assistance Eligible Individuals (AEIs) are still eligible for 15 months of a 65% COBRA subsidy.
An Assistance Eligible Individual (AEI) is an employee or an employee’s spouse/dependent(s) who elects COBRA coverage following a qualifying event (QE) related to an involuntary termination of employment that occurs at any point from:
September 1, 2008 through May 31, 2010; or
March 2, 2010 through May 31, 2010 if:
the involuntary termination follows a QE that was a reduction of hours; and the reduction of hours occurred at any time from September 1, 2008 through May 31, 2010 (a reduction of hours is a QE when the employee and his/her spouse/dependent(s) lose coverage because the employee, though still employed, is no longer working enough hours to satisfy the employer health plan’s eligibility requirements).
The maximum period of continuation coverage is measured from the date of the original qualifying event (generally 18 months). However, ARRA, as amended, provides that the 15 month premium reduction (ARRA subsidy) period begins on the first day of the first period of coverage for which an individual is “assistance eligible.” This is of particular importance to individuals who experience an involuntary termination following a reduction of hours. Only individuals who have additional periods of COBRA (or state continuation) coverage remaining after they become AEIs are entitled to the 65% subsidy.
Because the latest changes are retroactive to April 1, 2010, all qualified beneficiaries who are AEIs with qualifying events between April 1, 2010 and April 19, 2010 have to get updated ARRA notifications.
There are many new requirements that are taking effect which includes updated notifications and reporting. The Department of Labor has posted new general notices on their site and we will also have these on file should you need them. Click on the link below for frequently asked questions and to download these new documents:
FAQ’s, Employer Responsibilities
Willis & Associates has always been a free resource to our clients when it comes to COBRA administration but as more legislation is passed; our COBRA eligible employers will likely need to retain a COBRA Administrator with more experience in this area. With this in mind, we researched several TPA’s and found a company that is not only affordable, but credible with an excellent customer service record. The TPA we would recommend is Ameriflex, they take the liability of COBRA administration, compliance and reporting out of your hands. Ameriflex offers groups with 75 covered employees or less full COBRA administration for $75 a month. If you are an employer with over 75 covered employees, we can get a custom quote for you. For more information about Ameriflex and their COBRA administration products, please call our office.
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