Now In: Consolidated Omnibus Budget Reconciliation Act ( COBRA )
Consolidated Omnibus Budget
Reconciliation Act ( COBRA )
The American Recovery and Reinvestment Act of 2009 Reduces COBRA
Premium
The recent stimulus package signed by President Obama included a temporary
COBRA premium reduction to assist eligible individuals. COBRA in general
allows certain individuals to extend their employer-provided group health
coverage if coverage was lost due to certain events such as divorce or
loss of a job. Through the temporary COBRA premium reduction, eligible
individuals pay only 35% of their COBRA premiums and the remaining 65
percent is reimbursed to the coverage provider through a tax credit. As
an employer you need to know how this will impact your business and what
compliance requirement may be needed.
COBRA Compliance Materials:
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Frequently Asked Questions
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What
is Cobra? |
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COBRA
gives workers who lose their jobs, and thus their
health benefits, the right to purchase group health
coverage provided by the plan under certain circumstances.
If the employer continues to
offer a group health plan, the employee and his/her
family can retain their group health coverage for
up to 18 months by paying group rates. The COBRA premium
may be higher than what the individual was paying
while employed but generally the cost is lower than
that for private, individual health insurance coverage.
The plan administrator must
notify affected employees of their right to elect
COBRA. The employee and his/her family each have 60
days to elect the COBRA coverage, otherwise they lose
all rights to COBRA benefits.
Note:
COBRA generally does not apply to plans sponsored
by employers with less than 20 employees. Many States
have similar requirements for small plans providing
benefits through an insurance company. The premium
reduction is available for plans covered by these
State laws. |
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What
notices if any are now required? |
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Notices
must be provided. Depending on the circumstances/eligibility,
forms may vary. Please click
here to view the forms available. |
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Which
employers are required to offer COBRA coverage? |
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Employers
with 20 or more employees are usually required to
offer COBRA coverage and to notify their employees
of the availability of such coverage. COBRA applies
to plans maintained by private-sector employers and
sponsored by most state and local governments. |
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Which
employees or a member of his/her family qualify for
the premium reduction? |
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The
premium reduction for COBRA continuation coverage
is available to "assistance eligible individuals".
An "assistance eligible individual"
is the employee or a member of his/her family who:
- is eligible for COBRA continuation
coverage at any time between September 1, 2008 and
December 31, 2009;
- elects COBRA coverage;
- and is eligible for COBRA
as a result of the employee's involuntary termination
between September 1, 2008 and December 31, 2009.
Those who are
eligible for other group health coverage (such as
a spouse's plan) or Medicare are not eligible for
the premium reduction. There is no premium reduction
for premiums paid for periods of coverage prior to
February 17, 2009. |
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What
is Special COBRA Election Opportunity? |
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Individuals
involuntarily terminated from September 1, 2008 through
February 16, 2009 who did not elect COBRA when it was
first offered OR who did elect COBRA, but are no longer
enrolled (for example because they were unable to continue
paying the premium) have a new election opportunity.
This election period begins on February 17, 2009 and
ends 60 days after the plan provides the required notice.
This special election period does not extend the period
of COBRA continuation coverage beyond the original maximum
period (generally 18 months from the employee's involuntary
termination). COBRA coverage elected in this special
election period begins with the first period of coverage
beginning on or after February 17, 2009. This special
election period opportunity does not apply to coverage
sponsored by employers with less than 20 employees that
is subject to State law.
NOTE: The information
contained on this page is for informational purposes
only and is not intended to provide legal advice or
legal opinion.
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