COBRA and Mini-COBRA Premium Subsidy Under ARRA

As you may know, both federal law (COBRA) and Massachusetts law (Mini-COBRA) require that certain individuals covered under a group health plan be offered continuation of that group coverage when certain events (i.e., "qualifying events") occur that would otherwise result in a loss of group coverage for that individual. These "qualified beneficiaries" may be required to pay 102 percent of the premium costs for COBRA or mini-COBRA continuation of coverage.

The American Recovery and Reinvestment Act of 2009 (ARRA), which was enacted on February 17, 2009, provides a federal subsidy of the premiums that certain qualified beneficiaries are expected to pay for COBRA and mini-COBRA coverage.

Since its enactment, ARRA has been amended and federal regulators have issued various clarifications about the law, including model notices and Q&As. The Commonwealth of Massachusetts has also issued requirements regarding the subsidy for certain mini-COBRA-qualified beneficiaries. As such, we have made multiple changes to our communications and processes. We hope the following information will help you track these various communications and changes made as a result of ARRA.

Timeline of ARRA Changes

February 17, 2009
When initially enacted, ARRA provided a subsidy of 65 percent of a qualified beneficiary's premium costs if the loss of coverage was due to an involuntary termination of employment between September 1, 2008 and December 31, 2009, and the qualified beneficiary was not eligible for other group coverage. These "assistance eligible individuals" (AEIs) were, therefore, only required to pay 35 percent of premium costs for a period of up to 9 months.

See the information released upon the enactment of ARRA on February 17, 2009.

January 1, 2010
On December 19, 2009, ARRA was amended by the Department of Defense Appropriations Act, 2010 (2010 DOD) to extend the subsidy to AEIs who have an involuntary termination of employment through February 28, 2010, and to extend the length of the subsidy period for all AEIs from 9 to up to 15 months.

See the information released regarding the 2010 DOD amendment.

March 1, 2010
On Tuesday, March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010, which further extends the COBRA and mini-COBRA subsidy eligibility period by one month, to March 31, 2010. Additionally, the legislation includes new requirements related to certain individuals who have a reduction in hours followed by an involuntary termination of employment.

COBRA Accounts:
As previously noted, accounts subject to COBRA should continue to work with their own legal counsel to determine how this new legislation may affect them.

Mini-COBRA Accounts:
Small groups subject to mini-COBRA* that have an employee who has a qualifying event from March 1, 2010 through March 31, 2010, should use the updated notices below. As a reminder, groups have 14 days from the date of a qualifying event to send a mini-COBRA election notice to a qualified beneficiary.

• Mini-COBRA Continuation Coverage Election and Subsidy Notice - Revised March 2010
• Mini-COBRA Continuation Coverage Election and Subsidy Notice with Coverage Options - Revised March 2010

We are assessing how these new requirements will affect the notice obligations of employers subject to mini-COBRA that have individuals who have a reduction of work hours followed by an involuntary termination of employment. Based on our initial understanding of these new requirements, employers will have up to 60 days from the date of such individuals' involuntary termination of employment (that occurs from March 2, 2010 through March 31, 2010) to send the notice to the individuals required under this new provision.

As more information becomes available, we will continue to share updates with you. Please be sure to check back here for the most up-to-date information, including any notices you may need to send to certain individuals with a reduction in work hours. If you have any questions, please contact your account executive.

 

* Generally, employers with 20 or more employees on more than 50 percent of its business days during the previous calendar year are subject to COBRA. Employers with 2-19 employees that are not subject to COBRA are usually subject to mini-COBRA.