December 23, 2009

HR Fact Friday: Congress Approves COBRA Premium Subsidy Extension

Filed under: General HR Buzz — Tags: , , , , , , — Paul @ 8:31 am

The U.S. government gave thousands of unemployed workers an early Christmas gift when the Senate, in a rare session Saturday, December 19, approved a military spending bill that would extend federal COBRA health insurance premium subsidies for the unemployed.

H.R. 3326, which the House approved this week, cleared the Senate on an 88-10 vote.

President Barack Obama signed the bill Monday, December 21. 

The bill would extend the nine-month, 65 percent premium federal subsidy by six months. The change would apply to those who are involuntarily terminated through February 28, 2010.

Under current law, employees who lose their jobs after December 31 are ineligible for the subsidy.

The legislation also would provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

In addition, the legislation would give beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out November 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35 percent share in January and receive COBRA coverage for December.

The legislation would require employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.

The fate of the legislation has been followed closely by terminated workers—eager to know whether the subsidy will be extended—as well as employers who need to tell beneficiaries the COBRA premium they should pay.

The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35 percent share in December.

Source: workforce.com, Jerry Geisel

p.s. Yes I know today is not Friday . . . because Christmas Day is on Friday I am posting this a bit early. Merry Christmas! PH

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August 21, 2009

HR Fact Friday: COBRA Enrollment Doubles After Launch of Subsidy Program

Filed under: COBRA — Tags: , , , , , — Paul @ 6:54 am

Enrollments in COBRA (health continuation coverage) rose from less than 20% to nearly 40%  since the U.S. government enacted a new subsidy program, according to a report by Hewitt Associates, a consulting firm.

Signed into law in February 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) provides for a 65% subsidy for COBRA continuation premiums for up to 9 months for workers who have been involuntarily terminated. To qualify for the subsidy, individuals must have a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.

Hewitt looked at COBRA enrollment activity for 200 large employers both before and after the enactment of the program. From March 2009 to June 2009, monthly COBRA enrollment rates for Americans eligible for the subsidy averaged 38%, up from 19% for the period of September 2008 through February 2009.

Hewitt estimates that without the subsidy, the average worker would spend $8,800 a year in COBRA healthcare costs. With the subsidy, the average worker would spend about $3,000 a year.

Source: HR.BLR.com 8/19/2009

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February 19, 2009

COBRA Subsidy: Requires Immediate Action!!

Filed under: COBRA — Tags: , , , , — Jane @ 6:00 am

The American Recovery and Reinvestment Act of 2009, signed on February 17th, (the massive federal“stimulus” legislation) includes an important provision that affects most employers and requires immediate attention.  The new law will provide for a 65% monthly COBRA premium subsidy for most employees who were involuntarily terminated between September 1, 2008 and December 31, 2009. While the intent of the law is to assist employees who were terminated in reductions in force, it appears that nearly all involuntarily terminated employees and their dependents (qualified “assistance eligible individuals”) may qualify for the subsidy.  The subsidy may extend up to 9 months and applies to medical, vision and dental benefits.  It applies to nearly all employers with group health plans, regardless of whether they are subject to COBRA’s continuation rules. That includes private and government employers subject to COBRA and some smaller employers that may be subject to state “mini-COBRA” laws.  “Assistance eligible individuals”  are qualified for subsidy payments effective at the first period of coverage, beginning on or after the bill was signed into law (February 17th).   Practically, for most employers, that date is March 1st . 

(more…)

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