DOL Releases Fact Sheet on Updated COBRA Premium Subsidy

Posted on December 28, 2009 by Ilyse Schuman

Stethoscope on pile of moneyThe Department of Labor’s Employee Benefits Security Administration (EBSA) has released a fact sheet explaining how the Defense Department’s 2010 appropriations bill (“2010 DOD Act”) extends the Consolidated Omnibus Budget Reconciliation Act (COBRA) premium reduction provided by the American Recovery and Reinvestment Act (“ARRA” or “Economic Stimulus”). In general, the 2010 DOD Act extended the COBRA premium reduction eligibility period for two months until February 28, 2010 and increased the maximum period for receiving the subsidy for an additional six months (from nine to 15 months).  Among other things, the fact sheet outlines who is now eligible for the premium reduction, the new period of coverage, and notice requirements plan administrators must provide in light of the extension. The fact sheet explains that plan administrators are now required to provide notice about the changes made to the COBRA premium reduction provisions to individuals who have already been provided a COBRA election notice, unless the election notice included the updated premium reduction information. These notices must be given to assistance eligible individuals by February 17, 2010. Individuals who have been terminated on or after October 31, 2009 and will lose health coverage must be provided this notice “within the normal timeframes for providing continuation coverage notices.” Those who had reached the end of the reduced premium period before the legislation extended it to15 months must be provided this notice within 60 days of the last day they were eligible to receive COBRA premium assistance under the old rules.

Photo credit:  Andriy Solovyov

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EBSA Provides Additional Guidance on COBRA Subsidy Under ARRA

Posted on December 4, 2009 by Governmental Affairs Team

Stethoscope on top of moneyThe DOL’s Employee Benefits Security Administration (EBSA) has posted on its website new guidance regarding the COBRA health insurance premium subsidy granted by the American Recovery and Reinvestment Act of 2009 (“ARRA” or “Economic Stimulus”). Under ARRA’s COBRA provisions, the government provides certain qualifying unemployed workers with a 65 percent subsidy of their health insurance premiums for up to nine months. Those individuals who first became eligible to receive this subsidy will begin to lose their coverage starting this month.

The guidance is provided in a question and answer format, and addresses two common questions about an individual’s eligibility for the ARRA premium assistance. In response to the first inquiry, the EBSA explains that an employee who is involuntarily terminated this year but would not become eligible for COBRA coverage until on or after January 1, 2010 would not be entitled to the premium assistance under ARRA, as this law requires that an assistance eligible individual be “a qualified beneficiary as the result of an involuntary termination that occurred during the period from September 1, 2008, through December 31, 2009, is eligible for COBRA continuation coverage at any time during that period, and elects the COBRA continuation coverage.” Therefore, an individual who does not become eligible for COBRA until after December 31, 2009 would not meet this criteria. The EBSA explains in response to the second inquiry that an assistance eligible individual who is involuntarily laid off and qualifies for COBRA coverage before 2010 is entitled to the full nine months of premium assistance.

The EBSA notes, however, that these responses are based on current law, and thus do not take into consideration pending legislation. A number of bills have been introduced this year that would extend COBRA coverage. The latest such bill was introduced last month by Senators Sherrod Brown (D-Ohio) and Robert Casey (D-Pa.). Their bill, the COBRA Subsidy Extension and Enhancement Act of 2009 (S. 2730), would extend the COBRA subsidy deadline by six months, as well as increase the amount of the subsidy and the number of individuals who would be able to take advantage of this program. This measure has been referred to the Senate Committee on Health, Education, Labor and Pensions. A COBRA continuation bill was also introduced by Rep. Sestak (D-Pa.), although this bill, the Extended COBRA Continuation Protection Act of 2009 (H.R. 3930), would keep the subsidy at 65 percent. COBRA extension could also be included in a new jobs bill package under consideration, however, final action on a jobs bill or other COBRA continuation proposals may not come before the end of the year. Should legislation extending COBRA coverage be enacted, the EBSA guidance would necessarily be amended.

This entry was written by Jay Sumner and Ilyse Schuman.

Photo credit: Andriy Solovyov
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Measures Would Extend COBRA Coverage

Posted on July 23, 2009 by Jay Sumner

Senator Roland Burris (D-IL) has introduced a bill that would extend temporarily the 18-month period of healthcare continuation coverage required by the Consolidated Omnibus Budget Reconciliation Act (COBRA). The COBRA Coverage Extension Act of 2009 (S. 1488) would provide up to 24 months of continuation coverage under group health plans required under COBRA, the law that amended the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage for certain qualifying former employees, retirees, spouses, former spouses and dependent children. Specifically, S. 1488 would entitle any individual who is eligible for and has elected continuation coverage under COBRA as of the date of this bill’s enactment, and whose coverage would end before 12 calendar months had elapsed from the date of enactment due to an 18-month continuation limitation, to continue coverage until a full 12 months had passed after the date of enactment, or 24 months after the date of the qualifying COBRA event, whichever is earlier. This bill has been referred to the Senate Committee on Health, Education, Labor, and Pensions.

This bill joins another recent measure aimed at extending COBRA continuation coverage. The House’s much-publicized healthcare bill, America's Affordable Health Choices Act of 2009 (H.R. 3200), includes an amendment that would extend COBRA coverage until the individual becomes covered under another employer’s group health plan or under a health insurance exchange plan, the latter of which would be created under the bill itself. The extension would not apply to certain medical flexible spending arrangements. Offered by Rep. Susan Davis (D-CA), this amendment was approved by voice vote by the House Committee on Education and Labor on July 17. Given the development of the health insurance exchange system would not be established until the year 2013 at the earliest, it is conceivable that if this bill were to pass, COBRA continuation coverage could be extended for years. This healthcare bill has been approved by both the House Committees on Education and Labor, and Ways and Means.

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