About the writer:
Cynthia Marcotte Stamer, is nationally and internationally recognized for her work assisting businesses, governments, and other entities to develop creative strategies for dealing with employee benefit and related human resources, insurance, health care and finance concerns. Ms. Stamer helps businesses design, administer and defend cost-effective employee benefit other human resources programs, policies and procedures to meet their budgetary and other business objectives.
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, contact Cynthia Marcotte Stamer at cstamer@solutionslawyer.net.
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