Important 2010 changes to COBRA
The
American Recovery and Reinvestment Act (ARRA) was signed by President
Obama on February 17, 2009 with an extension of the legislation passing on December 21, 2009 , again on March 2, 2010 , and most recently on April 16, 2010. The legislation allows for COBRA premiums to be subsidized
for employees that are/were laid off between September 1, 2008 and May 31, 2010. The subsidy is 65% and allowed for up to fifteen months
or the end of COBRA eligibility, whichever is first.
These are a few of the key points:
- The program began March 1, 2009.
- FSA’s are not eligible for the
subsidy.
- Your maximum COBRA coverage
period will be 18 months from your original loss of coverage date.
- You may not elect subsidized
COBRA if you are eligible for coverage under another group plan, (including your spouse’s plan) or
Medicare.
- If your adjusted gross income is
less than $125,000 if single, or $250,000 for a married couple filing
jointly, you will be entitled to the full subsidy. It phases out for incomes above these
limits.
- Domestic partners are not eligible for the subsidy.
This
is merely an interpretation of the information currently available and is
subject to change. As further
administrative details become available, we will update this posting. If you have other questions or concerns,
please contact us at subsidy@cobramanagement.com
Department of Labor website link
for more detailed information
www.dol.gov/ebsa/cobra.html
Internal Revenue Service
Employer COBRA information
www.irs.gov
Update: April 16, 2010
Congress has once again passed legislation that will extend the COBRA
premium reduction under ARRA to individuals who were involuntarily terminated
from employment from April 1, 2010 through May 31, 2010. No further information
has been released at this time. We will notify you as soon as additional
guidance has been issued on new notification requirements.
Update: March 2, 2010
The Temporary Extension Act of 2010 was signed into law on March 2, 2010, extending the premium reduction under ARRA to individuals who were involuntarily terminated from employment March 1, 2010 through March 31, 2010. Assistance Eligible Individuals (AEIs) will continue to receive a 65% subsidy for a maximum of 15 months, unless they become eligible for other group coverage or Medicare, or the maximum COBRA period ends first.
New rules apply for individuals who lost coverage due to a reduction in hours between 9-1-08 and 3-31-10 then were involuntarily terminated from employment on or after 3-2-10 through 3-31-10. We are waiting for clarification from the Department of Labor, at which time we will be posting more information regarding this class of qualified beneficiaries.
Update: December 21, 2009
Legislation
extending the ARRA COBRA premium subsidy program has passed both the House and
the Senate and was signed by President Obama on December 21, 2009. What does
this mean for COBRA participants who qualify as “Assistance Eligible
Individuals?”
Extended eligibility period to 2/28/2010
The subsidy
program now covers individuals becoming eligible for COBRA due to involuntary
employment termination on or before Feb. 28, 2010. It is unclear whether an individual who is involuntarily terminated in
February, 2010 and becomes eligible for COBRA continuation coverage March 1,
2010, will be eligible for the subsidy.
Longer subsidy period from nine to fifteen months
The subsidy
period for assistance-eligible individuals (AEIs) – including anyone now receiving
the subsidy – may last for up to 15 months instead of just nine months.
Subsidy Amount and Involuntary Terminations – stays at 65%
The subsidy
amount remains at 65 percent, and eligibility is still limited to people losing
health coverage due to involuntary employment terminations.
AEIs with exhausted subsidy periods
Individuals who exhausted their nine-month subsidy period as of November 30, 2009 could receive the subsidy for another six months. Individuals
who dropped COBRA after their subsidy expired may retroactively elect COBRA
back to December 1, 2009. These individuals must pay 35% of the full premium
costs no later than 60 days after the date of enactment. Coverage will not be
reinstated until payment is received.
Anyone who continued
COBRA and made higher premium payments after exhausting the subsidy would be
reimbursed for the excess payments or given
credits toward future premium payments.
Department of Labor website link
for more detailed information
www.dol.gov/ebsa/cobra.html
Internal Revenue Service
Employer COBRA information
www.irs.gov
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