•
The stimulus package, which was enacted in February 2009
as the American Recovery and Reinvestment Act of 2009 (ARRA),
temporarily reduces the premium for COBRA or comparable
State continuation coverage for eligible individuals.
•
The Department of Defense Appropriations Act, 2010 (2010
DOD Act) amended ARRA to extend the period to qualify
for the COBRA premium reduction, as well as extended the
maximum period for receiving the subsidy an additional
six months (from nine to 15 months).
•
The Temporary Extension Act of 2010 (TEA) was signed by
the president on March 2, 2010. TEA amended ARRA to
further extend the period to qualify for the COBRA
premium reduction until March 31, 2010. TEA also
provides that an involuntary termination of employment
that occurs on or after March 2, 2010 but by March 31,
2010 is a qualifying event for purposes of ARRA if it
was preceded by a qualifying event that was a reduction
of hours occurring at any time from September 1, 2008
through March 31, 2010.
•
On April 15th, Congress voted to extend the COBRA
Subsidy until May 31st, 2010
FAQs:
-
Which individuals are eligible for the COBRA Subsidy
Extension?
Employees (as well as their covered spouse and
covered dependents) who lose their group insurance
coverage due to the involuntary loss of their job or
reduction of hours (other than for gross misconduct)
on or after September 1, 2008 but before May 31,
2010 are eligible for the COBRA Subsidy. These
individuals are known as “Assistance Eligible
Individuals” or “AEIs”.
To be considered an “assistance eligible individual” and
receive reduced premiums you:
·
must have a continuation
coverage election opportunity (“qualifying event”)*
related to an involuntary termination of employment that
occurred at any time from September 1, 2008 through May
31, 2010;
·
must elect the coverage
(within the appropriate timeframes);
·
must not be eligible for
Medicare; and
·
must not be eligible for
coverage under any other group health plan, such as a
plan sponsored by a successor employer or a spouse’s
employer.
*TEA also provides that individuals who lost coverage
because of a qualifying event that was a reduction of
hours that occurred any time from September 1, 2008
through March 31, 2010 may be eligible for the premium
reduction if the employee is then involuntarily
terminated on or after March 2, 2010 and no later than
March 31, 2010. The premium assistance for these
individuals begins with the first period of coverage
following the employee’s involuntary termination (that
occurs on or after March 2, 2010 through March 31,
2010). TEA also provides a new election opportunity for
these individuals if they did not elect (or elected and
discontinued) COBRA.
Note:
A reduction of hours is a qualifying event when the
employee and his/her family lose coverage because the
employee, though still employed, is no longer working
enough hours to satisfy the group health plan’s
eligibility requirements.
-
What is the amount of the COBRA Subsidy?
The subsidy is 65% of the AEI’s required monthly
premium contribution. Typically, AEIs will therefore
be required to pay only 35% of the required premium
to the Employer (or directly to the insurer in some
state continuation situations). Note: If the
Employer is paying a portion of the COBRA premium on
behalf of an AEI, the subsidy would only be for 65%
of the AEI’s remaining premium. The Employer’s
contribution in that situation is not subsidized.
-
What is the duration of the COBRA Subsidy?
The COBRA Subsidy is provided to an AEI for up to 15
months. The subsidy ends if the AEI becomes eligible
for other comprehensive group health coverage or
Medicare. For subsidies of state continuation
coverage, the subsidy ends if the individual’s state
continuation coverage period expires. The subsidy
does extend a state’s continuation coverage period.
(return)
-
Does the new COBRA Subsidy Extension lengthen the
amount of time an AEI may stay on COBRA?
No.
-
I was on the COBRA Subsidy from March 2009 thru
November 2009. I paid non-subsidized premiums in the
month of December and again in January. When do I
start paying the subsidized rates again?
The extension is actually retroactive. AEIs who
remain eligible for subsidy assistance will receive
a credit for any non-subsidized premiums paid upon
expiration of their original subsidy. This premium
will be automatically credited to future coverage
months. However, should you desire a refund of any
overpaid premium, please contact Admin America to
process this request.
-
How can I contact Admin America?
Admin America’s COBRA Department can be reached at:
678-578-4338. Alternatively, as Admin
America anticipates a higher call volume, you may
email:
cobra@adminamerica.com.
-
If an AEI becomes eligible for other comprehensive
group health coverage or Medicare but chooses not to
enroll in that coverage, do they still lose the
COBRA Subsidy?
Yes.
-
If an AEI becomes eligible for other comprehensive
group health coverage or Medicare but chooses not to
enroll in that coverage, do they lose the right to
continue under COBRA without the COBRA Subsidy?
No. They can continue their COBRA coverage if they
so choose; the federal government just will not
subsidize the premium any longer.
-
What if the AEI fails to notify the Employer once
they are eligible for other comprehensive group
health coverage or Medicare?
AEIs who fail to provide notice of eligibility for other
coverage or Medicare are subject to penalties equal to
110% of any subsidies paid on their behalf after the
date of eligibility.
This page was last updated on 01/28/2010
