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COBRA

Agencies Revise COBRA and CHIPRA Notices; Announce Special Marketplace Enrollment for COBRA Beneficiaries

The federal agencies charged with administering the Affordable Care Act (“ACA”) have issued revised versions of the model COBRA and CHIPRA notices.  Moreover, current COBRA beneficiaries have been given a special one-time window in which to enroll in Marketplace coverage.

Model Exchange Notices and Revised COBRA Election Notice Issued

The Department of Labor has issued model notices for employers’ use in satisfying the Affordable Care Act requirement to provide employees with notice of coverage options available through a Health Insurance Marketplace.  Employers must distribute these notices to current employees no later than October 1, 2013, and beginning October 1, 2013, must distribute the notices to new employees within 14 days of hire.

COMMON PLAN MISTAKES: Failure to Timely Offer COBRA Coverage

The failure to timely offer COBRA continuation coverage to an employee on a non-FMLA leave is a common mistake in the administration of a self-funded health plan.  This mistake generally occurs because the plan sponsor wishes to assist an employee in his or her time of need.  Unfortunately, this can leave the sponsor with no stop-loss coverage for such an employee’s catastrophic health claims.

Extension of Trade Adjustment Assistance Affects Certain COBRA Coverage

The Trade Act of 2002 created a health care tax credit (“HCTC”) for certain individuals who become eligible for trade adjustment assistance (“TAA eligible individuals”), as well as for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (“PBGC recipients”). Under the original HCTC provisions, eligible individuals could either claim a tax credit or receive advance payment of 65% of the premiums they pay for qualified health insurance, including COBRA continuation coverage. Special COBRA rights, including a second opportunity to elect COBRA coverage, also apply to TAA-eligible individuals and PBGC recipients.

COBRA Premium Subsidy Extended Again

As had been widely anticipated, Congress has extended the 65% COBRA premium subsidy yet again. Under the “Continuing Extension Act of 2010,” the subsidy will now apply to involuntary terminations occurring on or before May 31, 2010 (rather than March 31, 2010).

Latest Extension of COBRA Premium Subsidy Comes with a Twist

As widely reported in the news media, the recent extension of unemployment insurance benefits included a one-month extension of the 65% COBRA premium subsidy. Under the “Temporary Extensions Act of 2010,” the subsidy will now apply to involuntary terminations occurring on or before March 31, 2010 (rather than February 28, 2010).

Late COBRA Notice Voids Stop-Loss Coverage

A recent decision by an Illinois federal court (Majestic Star Casino, LLC v. Trustmark Insurance Co.) carries two important lessons for sponsors and administrators of self-funded health plans. Unfortunately for the plan sponsor involved in this case, those lessons came at a steep price — in the form of denied stop-loss claims.

DOL Updates Model COBRA Notices

As we reported in our December 2009 article, Congress and the President have extended the 65% COBRA premium subsidy enacted as part of the American Recovery and Reinvestment Act (“ARRA”). The maximum subsidy period is now 15 months (rather than 9), and the subsidy will now apply to COBRA coverage attributable to involuntary terminations occurring on or before February 28, 2010 (rather than December 31, 2009).

COBRA Premium Subsidy Extended to 15 Months

The Senate has now joined the House of Representatives in passing legislation to extend the federal government’s 65% COBRA premium subsidy. President Obama signed the bill into law on December 21, 2009. This date will therefore constitute the bill’s “enactment date,” to which many of the deadlines specified in the bill are tied.

DOL Releases Application For Review Of COBRA Subsidy Denial

The February 2009 economic stimulus package included a temporary 65% federal premium subsidy for individuals becoming entitled to COBRA coverage due to an employee’s involuntary termination of employment. Congress recognized, however, that the purpose of this subsidy could be undermined if disputes between employers and their former employees as to the subsidy’s availability took months or even years to resolve. Accordingly, Congress provided that any such dispute would be resolved by a federal agency — the Department of Labor (“DOL”) for private employer plans subject to the federal COBRA provisions; the Department of Health and Human Services (“HHS”) for governmental plans and small insured plans covered by state “mini-COBRA” statutes. Moreover, these agencies are to resolve such disputes within 15 days.

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