Below is a brief synopsis from the Cincinnati Enquirer explaining the newly enacted COBRA and premium subsidy program.
For a full explanation, please contact the Department of Labor, legal counsel or your COBRA administrator.
Current compliance will cover two primary groups: COBRA eligible employees from 9/1/08 to 2/17/09 and from 2/17/09 and forward.
Business owners should begin compliance with the following steps:
STEP #1 – Identify all COBRA-eligible employees who were Involuntarily Terminated between Sept. 1, 2008, and Feb. 17, 2009. If Voluntary Termination is elected, an appeal process is granted to the individual through the Department of Labor (DOL) or Health and Human Services (HHS). DOL and HHS will have 15 days to respond.
STEP #2 — Go to Department of Labor website and download the Model Notices. The notices should then be updated to include your company provisions, plan specifics and contact information.
HTTP://www.dol.gov/ebsa/COBRA.html
STEP #3 — Before April 18, notices must go out to COBRA-eligible workers or those with Qualifying Events who lost coverage from 9/1/08 to 2/16/09.
STEP #4 — Election period is open for 60 days to former employee or COBRA eligible and retroactive to 3/1/09.
STEP #5 — Determination of whether election is eligible for premium subsidy – Assistance Eligible Individual (AEI).
Who is an AEI?
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Insurance coverage loss due to involuntary termination of employment
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Between September 1, 2008 and December 31, 2009
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All involuntary terminations – not just layoffs
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AEIs include spouse and dependent children covered on qualifying event date
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Separate elections can be made for each one of these covered individuals
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Excludes: Individuals who are not qualified beneficiaries under COBRA
- Individual cannot be eligible for other group health coverage
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Once eligible for coverage under another plan, either through coverage under a spouses plan or through a new employers plan, the individual is no longer an AEI and the subsidy is to cease
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Income Limitations - Eligibility for the subsidy is phased out for high-income individuals
STEP # 6 — Recovery of 65% premium subsidy through a credit on company payroll taxes. Once premium is received by company, the company adds employee back to insurance billing retroactive to March 1 or qualifying effective date. Premium is paid in full and then credit is taken from payroll taxes.
STEP #7 — Employees terminating after 2/17/09 should receive the General Notice (Full Version) that gives explanation of premium subsidy through December 31, 2009.
NOTE: There is much language contained in the legislation not included in the synopsis. Our goal is to get a list of steps needed to comply for immediate compliance needs. For further information and guidance, contact DOL, legal counsel or COBRA administrator. This is only a summary of the legislation.
Mini-COBRA (2-19 employees) — many states are still trying to resolve compliance with the legislation. Since the states regulate insurance carriers and not employers, the burden of the subsidy will, most likely, fall to the insurance companies for managing the billing and recovery of the premium subsidy. More to come on this situation as the carriers have until April 18th to notify terminated employees.
If you would like information on how to institute a simple and inexpensive technology that will send email alerts and reminders to HR, brokers and/or advisors on termination or elibility events, contact Beneficiency.net at 859-431-3360. Beneficiency is a web-based application that will electronically push email alerts on critical eligibility and termination events while connecting to your COBRA administrator.
Stay tuned for more updates.
Electronic notification for benefits compliance
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COBRA tasks ex-employers | Cincinnati Enquirer | Cincinnati.Com |
