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The American Recovery and Reinvestment Act of 2009 (the "Stimulus Bill") immediately expanded the group health plan coverage continuation obligations applicable to group health plans covered by the Consolidated Omnibus Budget Reconciliation Act (COBRA) a series of complicated temporary COBRA mandates that became immediately effective when President Obama signed the Stimulus Bill into law on February 17, 2009.

The American Recovery and Reinvestment Act of 2009 (the "Stimulus Bill") immediately expanded the group health plan coverage continuation obligations applicable to group health plans covered by the Consolidated Omnibus Budget Reconciliation Act (COBRA) a series of complicated temporary COBRA mandates that became immediately effective when President Obama signed the Stimulus Bill into law on February 17, 2009.

The COBRA amendments in the Stimulus Bill are the latest list in a series of new laws and regulations requiring changes in health plan eligibility rules, notices, administrative forms and practices. Employers, group health plan administrators and insurers must act quickly to review and update their COBRA and other health plan eligibility practices in response to these developments.

The COBRA Amendments enacted under the Stimulus Bill require that employers sponsoring group health plans and group health plan administrators take immediate steps to comply with a series of special temporary mandates applicable to certain individuals experiencing a loss of group health plan coverage due to the involuntary termination of an employee between September 1, 2008 and December 31, 2009 ("assistance-eligible individuals").

Highlights of the new COBRA mandates affecting group health plans enacted as part of the Stimulus Bill include the following:

Group health plans must notify assistance eligible individuals of the special COBRA rights granted under the Stimulus Bill. Although regulators are required to publish a model notice for this purpose by April 15, 2009, many group health plan sponsors and administrators will not want to delay providing required notifications until that time, as delay in notification extends the period that assistance-eligible individuals have to elect COBRA coverage.

The COBRA premium that a group health plans can charge an assistance-eligible individual for COBRA coverage is limited to 35 percent of the otherwise applicable COBRA premium for a period of up to 9 months.

Group health plans must offer assistance eligible individuals who previously did not elect COBRA coverage before February 17, 2009 a second chance to enroll in COBRA coverage within the 60-day period beginning on the date the group health plan provides the required notice of the Stimulus Bill COBRA rights. COBRA coverage for assistance eligible individuals making these second chance elections must begin with the first period of coverage beginning after February 16, 2009 (March 1, 2009 for most plans) and ends when COBRA coverage.

Group health plans offering participants different coverage options are required to allow assistance eligible individuals the opportunity to change their coverage elections under certain circumstances.
Employers may seek to recoup COBRA premiums paid by the employer to maintain COBRA coverage for assistance-eligible individuals in excess of reduced COBRA premium amounts paid by assistance-eligible individuals filing the necessary claims and reports to qualify to claim a payroll
tax credit equal to those additional amounts. This payroll tax credit is the mechanism through which Congress sought under the Stimulus Bill to subsidize temporarily 65% of the COBRA premiums of assistance-eligible individuals.

In addition to these special COBRA Rules for assistance eligible individuals, the Stimulus Bill also amends extends COBRA benefits for certain employees and dependents whose qualifying event is a reduction in hours or termination of employment where either:

The employee is eligible for certain Trade Adjustment Assistance; or
The covered employee had a non-forfeitable right to a benefit under a defined benefit plan which will be paid by the Pension Benefit Guaranty Corporation (PBGC) forfeitable right to a benefit.

For assistance in evaluating and responding to these and other employee benefit or human resources developments under the Stimulus Bill, see Cindy's Website: Cynthia Marcotte Stamer; or email her directly:cstamer@solutionslawyer.net.

Originally posted to Mr Sandman on Mon Mar 09, 2009 at 07:29 PM PDT.

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Comment Preferences

  •  TIP JAR (9+ / 0-)

    Stimulus Bill Amends COBRA

    Mr Sandman "I may be old but, I still can't be had for just for the price of a cocktail like a salted peanut!"

    by Mr Sandman on Mon Mar 09, 2009 at 07:31:32 PM PDT

    •  Glad to see (2+ / 0-)
      Recommended by:
      devtob, JVolvo

      the 35 percent for 9 months. That will be a huge help.

      I said in another diary a few days ago i was paying 900/month for 9 months of COBRA a few years ago, which drained savings... this is a real and tangible benefit.

      "Many people did not care for Pat Buchanan's speech; it probably sounded better in the original German," Molly Ivins, 1992

      by jeffinalabama on Mon Mar 09, 2009 at 07:34:13 PM PDT

      [ Parent ]

  •  And if you turned down COBRA 'cause of the $$$$s (3+ / 0-)
    Recommended by:
    devtob, jeffinalabama, bear83

    You now get a second chance to re-enroll through your former employer.

    •  Nine months isn't much time in this economy. (2+ / 0-)
      Recommended by:
      bear83, chrome327

      Why didn't they just put those on unemployment on Medicare and up the Medicare tax to cover it.

      That pretty much fixes the health care problem. Anyone who can't pay for health care gets Medicare. Anyone who can pay for health care can get on Medicare for a sliding scale fee.

      It would be a big economic boost at 50M Americans would get access to health coverage and take advantage of it and....get health care...big demand for MR's, RN's, etc.

  •  What do school districts do for the 65%, though? (0+ / 0-)

    as they don't pay taxes.  This is the dilemma, and I haven't heard the answer yet.  

    I love this plan, and it will be a lifeline to so many.  But I hope to hear of a good remedy for public and nonprofit organizations, because they don't know yet where the reimbursement will be.

    Liberty means responsibility. That is why most men dread it. -George Bernard Shaw

    by soyinkafan on Mon Mar 09, 2009 at 09:07:47 PM PDT

    •  everybody (pretty much) withholds taxes (0+ / 0-)

      The IRS has specific guidelines up for employers. Here's the PDF for the updated instructions for the form 941.

      If you don't know what form 941 is, that's cool. But it's the mechanism for how COBRA reimbursement works. You (the employer) deduct the amount of reimbursement for COBRA from the quarterly taxes that you owe.

  •  What about those presently on COBRA? (0+ / 0-)

    I thought this extension was only for those who began coverage last fall? So someone who is currently on it, but started in 2007 is not eligible. Is this correct?

    "Most people would sooner die than think; in fact, they do so."

    by sebastianguy99 on Mon Mar 09, 2009 at 09:18:54 PM PDT

    •  I think that's right (1+ / 0-)
      Recommended by:
      sebastianguy99

      I started paying Cobra 10/2007 and my Cobra coverage ends 4/2009.  I get no benefit from the stimilus bill as I understand it.  I got no extended unemployment and no help with health insurance.  Now, I'm broke, unemployed and about to lose everything.  They have me right where they want me, I think.

      •  I am in the same boat (0+ / 0-)

        My Cobra started 12/2007 so nothing for me. As far as EUC, I have to sit and hope other people lose their jobs so Texas will qualify for an additional 13-weeks. I hear we supposed to find out tomorrow.

        Have you tried to file a new claim? I was on another message board, in between looking for a job, and someone commented that he was told by the unemployment people to file another claim.

        Not sure if it worked, but it might be something to try if you haven't already.

        Boy, were people like you and me mislead by reports or what?

        "Most people would sooner die than think; in fact, they do so."

        by sebastianguy99 on Tue Mar 10, 2009 at 05:43:33 PM PDT

        [ Parent ]

  •  another good reason for single payer (0+ / 0-)

    It's a huge burden on companies, particularly smaller organizations, to handle health insurance-related issues.

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