Industry News: Stay Up To Date On COBRA Changes


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Industry News: Stay Up To Date On COBRA Changes

Issue: 2009apr

Among the provisions of the stimulus bill that was signed by President Obama and made law on February 17 is a change to regulations regarding the Consolidated Omnibus Budget Reconciliation Act (COBRA).

COBRA allows workers and their families to continue the group health coverage that was provided by their employer’s group healthcare plan for a limited period of time. The coverage extends to workers who have been involuntarily terminated, taken a cut in hours, are between jobs, or experienced life events such as death and divorce.

Under the new law, employees who have been involuntarily terminated between September 1, 2008, and December 31, 2009, will only pay 35 percent of the premium for up to nine months.

The employer must cover the remaining amount, then take a payroll tax credit for that amount. The same health coverage that was available at the time of employment must be offered, but the employer may also offer less expensive options.

Employers must provide notices on the updated COBRA election information by April 18.
The notices are:

Revised Election Notice
This notice is for qualified beneficiaries who have not yet received an election notice, or who received one on or after February 17 of this year that did not include the additional information on the premium subsidy; and who have experienced any qualifying event at any time from September 1, 2008, through December 31, 2009.
Subsidy-Only Notice
This notice should be sent instead of the Revised Election Notice to qualified beneficiaries currently enrolled in COBRA coverage with any qualifying event (not just termination of employment or involuntary termination of employment) that occurred on or after September 1, 2008. It describes the availability of the premium subsidy, but does not include the special enrollment information.

Special Enrollment Notice
This notice should be sent to all qualified beneficiaries where the qualifying event causing loss of coverage is involuntary termination of employment between September 1, 2008 and February 16 of this year, and the qualified beneficiary either did not elect COBRA coverage or elected it but subsequently discontinued it.

This notice includes information on the special enrollment opportunity as well as premium subsidy information, and can be sent in lieu of the Revised Election Notice rather than in addition to that notice.
For more information on COBRA and qualifications for enrollment, visit www.irs.gov/newsroom/article/0,,id=204505,00.html or www.dol.gov/ebsa/cobra.html.

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