COBRA Q & A
from CBIA webinar March 5, 2009

 

Special COBRA Election Opportunity for employers with 20 or more employees 

Individuals involuntarily terminated from September 1, 2008 through February 16, 2009 who did not elect COBRA when it was first offered OR who did elect COBRA, but are no longer enrolled (for example because they were unable to continue paying the premium) have a new election opportunity. This election period begins on February 17, 2009 and ends 60 days after the plan provides the required notice. This special election period does not extend the period of COBRA continuation coverage beyond the original maximum period (generally 18 months from the employee's involuntary termination). COBRA coverage elected in this special election period begins with the first period of coverage beginning on or after February 17, 2009.

 

No Special COBRA Election Opportunity for Employers with fewer than 20 employees! 

The special election period opportunity described above does not apply to 1) those who didn’t elect continuation coverage, 2) those whose coverage was terminated for non-payment during the period between 9/1/08 – 2/17/09, and 3) those who dropped coverage.  These individuals do not meet the definition of an AEI, and are therefore not eligible for the subsidy.  Those who DID elect Continuation coverage during this period are eligible for the subsidy effective 3/1/09, as are those who experience an involuntary termination between 2/17/09 – 12/31/09.

 

Q: Does this law apply to self-funded groups too?
A: Yes

 

Q: If an employee who is presently on COBRA pays 100% of premium for the month of March, how does he get reimbursed?
A: Employer must extend a premium credit or refund

 

Q: How will a non-profit that does not file form 941 receive their reimbursement of premium?
A: Under research. In the meantime visit www.IRS.gov

 

Q: What plans are subject to COBRA?
A: Group health, dental, vision, EAP, and, most likely, HRA.

 

Q: What about those employees who get fired for cause?
A: That’s involuntary, except for gross misconduct.

 

Q: What about domestic partners?
A: DP’s are not recognized as eligible qualified beneficiaries under Federal COBRA.

 

Q: If an employer has CBIA administer their COBRA, do they need to do anything regarding notification to terminated employees?
A: No

 

Q: Does this apply to employees who were hired for this fiscal year only and their employment ends the last day of school? Are they considered AEI's?

A: They are AEIs, provided that they were enrolled in coverage and are/were involuntarily terminated between 9/1/08 and 12/31/09.

 

Q: Are employers required to include income limitation information on the COBRA notice?

A: Yes

 

Q: When does the 60 day special enrollment period begin?

A: For those whose involuntary termination occurred from 9/1/08 – 2/17/09, sixty days starts on the date of notice. For those who involuntarily term between 2/17/09-12/31/09, the sixty day period starts on the date of notice.

 

Q: What about the person who is laid off but was not on the group health insurance plan to begin with? These individuals would not be offered COBRA anyway as they would not be eligible. (Just want to confirm that the subsidy would not apply.)
A: These people are not AEI’s and, therefore, not eligible for any COBRA or subsidy.

 

Q: Did you say HSAs are not included as an eligible product with ARRA?
A: FSAs are the only savings mechanism that is specifically excluded.

 

Q: Should companies prepare a form for ineligible employees to sign when waiving the subsidy?
A: Yes, that is a notice requirement for AEIs.

 

Q: Where would an employer obtain the special COBRA notification forms to send to qualified people?
A: DOL will issue a sample notice by 3/17/09

 

Q: You mentioned FSA plans are not subject to this cobra change. Is that right?
A: Yes

 

Q: What is the timetable for changing to the new cobra election notification (100 % employee paid) to the new 65% subsidy notification?
A: 60 days following the Enactment date.

 

Q: What you do mean for plans with under 20? Do you mean the employer has fewer than 20 employees, or do you mean that fewer than 20 people are AEIs?
A: Employers with less than 20 full time employees are subject to State Continuation law.

 

Q: What if employers are not able to pay the 65% because of major business slowdown?
A: The reimbursement is not optional, they must pay.

 

Q: How does this apply to non profit companies?
A: If the non-profit is subject to COBRA or State Continuation, it applies.

 

Q: We use a payroll service (ADP) to do our 941s. Should we expect a refund from ADP, since they take care of withholding and paying our payroll taxes?
A: Your payroll service should be guiding you through.

 

Q: Is dental covered?
A: Provided the AEI was on group dental at the time of the involuntary term.

 

Q: Is there any grace period for the AEI?
A: All standard COBRA payment timeframes, including grace periods, apply to the subsidized COBRA.

 

Q: What about an employee who was termed in Aug 2008, but became COBRA eligible on 9/1/08?
A: Under research

 

Q: How is a group to determine if an AEI has obtained new employment and an offer of health insurance but has chosen to keep his COBRA instead of enrolling in new group plan?
A: AEI’s responsibility.

 

Q: Will CBIA handle the notification requirements for those who have signed up for COBRA admin?
A: Yes

 

Q: If the group plan is terminated, is it still true that all participants in the plan no longer have any continuation rights? This would be if the group terminates the entire group plan because they decide to do so, or because they go out of business?
A: Yes

 

Q: If termed employees’ family was not covered are they eligible for subsidy?
A: No

 

Q: Our company has 27 employees but only 10 are in the health plan. What exactly applies to us?
A: Federal COBRA law

 

Q: If a spouse is eligible for coverage, but the coverage is not as good as the plan the AEI is leaving, is there any provision for any subsidy or coverage?
A: No

 

Q: What period is the income limitation based on? The year they elect cobra or previous year?
A: The year the AEI received the subsidy.

 

Q: In the event of an employee going on workers comp, most employers will issue COBRA docs with the qualifying event being reduction of hours. The employee is not actively at work, but not terminated. Would the employee in this example qualify for subsidy?
A: Only if they have been involuntarily terminated from employment.

 

Q: Does an employee have to be actually enrolled in Medicare to meet the definition of Medicare eligible? The same question about employer sponsored health plan. i.e.: must employee actually be enrolled?
A: No. Simple eligibility for another group health plan or Medicare will disqualify the AEI for the subsidy, but they will still be eligible for COBRA.

 

Q: Does AEI have to elect March 1? How about April 1 for example.
A: They have to elect 3/1/09 if their involuntary termination was between 9/1/08 and the Enactment Date.

 

Q: If the employee loses eligibility for the subsidy because they become "eligible" on another employer sponsored plan, can they choose to not enroll in the new plan because they'd rather continue on the plan with the subsidy?
A: No

 

Q: If an employee was not enrolled in health plan at termination are they eligible for COBRA and the subsidy?
A: No and no

 

Q: If someone is involuntarily terminated from their employer, but they have access to their spouse’s group plan (via a qualifying event) are they eligible for the 65% subsidy from the employer who laid them off?
A: No

 

Q: If an employee is termed after age 65 can they continue on COBRA?
A: Yes they can, provided that they enrolled in Medicare prior to the COBRA qualifying event. However, they are ineligible for the subsidy.

 

Q: What is deadline for notifying AEI of new subsidy?
A: 60 days following the Enactment Date, or qualifying event date for those who experience the involuntary term after the Enactment Date.

 

Q: Our Cobra TPA says they'll wait for DOL notice language and then they'll take most of the next month to create docs, procedures, etc. and that we cannot draft our own docs...
A: CBIA is doing this now

Q: AEIs can be put in a tough spot because their eligibility for the subsidy can hinge upon whether they get another job during the year. Is there a way for them to get out of the 10% penalty?
A: They should take the subsidy and then drop it when they become eligible for new coverage, provided they are under the income threshold.

 

Q: If we layoff an employee on 3/1/09, he/she is not an AEI because it is after 2/16/09, correct?
A: Wrong. AEIs are ANY covered employee who is involuntarily terminated between 9/1/08 and 12/31/09.

 

Q: You said it includes dental. What if the dental is fully funded by the employee?
A: Employer paid group Dental is eligible for the subsidy.

 

Q: If a company has closed the doors or in the midst of filing bankruptcy, do they have to offer COBRA subsidy?
A: For groups under 100 employees, they do not have to make COBRA available following a closing. Regarding bankruptcy, it is possible, if their underlying group health plan is still in place.

 

Q: If someone is involuntarily terminated on 12/1/09 would the nine months start there and go into 2010.
A: Yes, the subsidy is available for a rolling 9 month period for ANY covered employee who is involuntarily terminated between 9/1/08 and 12/31/09.

 

Q: We currently offer COBRA for the medical and dental plans (different carriers). Is it correct that the subsidy only applies to the medical or do I need to apply to dental too?
A: Both

 

Q: Should we post this notice in a common room such as a lunch room?
A: You can, but it is not good enough. It must go to all AEIs.

 

Q: What if there is a merger and the two companies have different coverage. Will someone on COBRA be eligible to pick up the new insurance and continue on COBRA?
A: Depends on the terms of the purchase and sale agreement. If the new plan is deemed a “successor” plan, coverage will be available through the new plan.

 

Q: If an individual was termed 10/1 and elected individual coverage instead of COBRA and now has decided to elect COBRA, what happens if he/she paid the March premium and accessed services under the individual plan. Can they elect COBRA coverage 4/1?
A: No, as AEIs, they are eligible for the subsidized coverage on March 1.

 

Q: Will the CBIA website have the new COBRA Election Notice forms with all the information needed available to download?
A: The election form will be part of CBIA’s free COBRA Administration service.

 

Q: What is the role of the insurance agency toward groups, owners and AEIs? How much are we to help, provide forms, requirements, etc?
A: Support and knowledge.

 

Q: If our health coverage is through CBIA do I need to provide all of this information or will it be provided by CBIA?
A: If CBIA is administering your COBRA, we will handle all notices.

 

Q: If someone is eligible for 18 months of COBRA coverage, and they receive the subsidy for the first 9 months, is the burden to collect the CORRECT premium on the 10th (and subsequent) months on the employer or on the AEI?
A: The employer or administrator.

 

Q: Is the 2nd election opportunity for qualifiers between 9/1 and 2/28 available to both state and federal continuants or just federal continuants?
A: It is unclear, as we are still awaiting State guidance, but it appears that both are eligible.

 

Q: Are employers required to provide notice to currently covered plan participants (active employees)?
A: No

 

Q: Who determines whether the terminated employee was involuntarily terminated?
A: Employer

 

Q: How will CBIA Health Connections know if an employee was voluntarily or involuntarily terminated if they plan to send notices to all those terminated between 9/1/08 and 2/17/09?
A: Employer needs to certify both group size and termination reason.

 

Q: Will brokers be cc'd on the letters? We often get the calls to help complete the forms.
A: No, but the letter we send to employers will be available on the broker website.

 

Q: If an existing CBIA client does not have your COBRA admin service and now elects it, will all notices go out to all AEI's going back to the effective date of 9/1/08?

A: No, just prospectively.

 

Q: Is the 2% admin fee, part of the overall subsidy
A: Just like COBRA, it is added to the entire premium, and then divided 65/35.

 

Q: If a company is in the process of filing bankruptcy and laid off all employees, but has kept the group plan to accommodate those who want COBRA payments, would they qualify for subsidy?
A: The group health will be terminated if no active employees exist.

 

Q: To clarify, an existing COBRA participant that elected COBRA 5/1/08 or even 8/1/08 is not eligible for the assistance?
A: Correct

 

Q: When and how is the employee count done? Current employee level? Enrolled employees? Are part timers included?
A: Full time employees per CMS guidelines

 

Q: Does the employer have to bill AEI monthly or let them remit on their own?
A: The employer or administrator should bill the AEI.

 

Q: What about a reduction in hours to make an employee ineligible. Is that an involuntary termination?
A: Not unless the individual was terminated.

 

Q: If an employee is currently on COBRA from another employer (works for new employer for less time than required to qualify for medical benefits) and then let go due to lack of work is there any required notification or responsibility to the second employer?
A: None, they are not AEIs as they weren’t on new employers plan.

 

Q: How does the new reimbursement law affect HRAs?
A: Not clear yet, but it appears HRAs are subsidy-eligible benefits.

 

Q: What if someone leaves the company voluntarily, but claims that a hostile work environment caused it, Are they covered under COBRA subsidy?
A: Technically it is voluntary termination. However, employees have the right to an appeal under DOL / DHHS Expedited Appeals Process (to be determined).

 

Q: If termed employees family was not covered are they eligible for 65%?
A: No

 

Q: What are the options if you are a small business and cannot afford to float the 65%?
A: If you are under 20 full time employees, the insurer should float the 65% per State Continuation guidelines (to be developed).

 

Q: Does this tax credit affect the amount paid for each working employee in regard to the employer portion of FICA and Medicare?
A: No

 

Q: Do you need to send a separate package of COBRA paperwork to the spouse of an employee that was terminated between the specified time frames, or does the information sent to the former employee covering the spouse suffice?
A: Each qualifying beneficiary is entitled to individual elections.

 

Q: Do I still have to send a notice to an AEI that was Medicare eligible upon termination?
A: No

 

Q: A dependent child of one of our Pennsylvania employees was offered coverage under COBRA effective 1/1/09 because she lost her dependent status (graduated from college). She did elect COBRA and has paid the premiums for January and February. I don't think she is considered to be an AEI, but I want to be sure. Can you answer this for me?
A: She is not an AEI.

 

Q: Please confirm no pre-existing conditions in any case?
A: For those who involuntarily terminated between 9/1/08 and 2/17/09 are not subject to 63 day HIPAA lookback period.

 

Q: Who will be responsible for determining subsidy eligibility and for informing the employers/ex-employees?
A: Employer is responsible for determining that a termination was involuntary. The AEI is responsible for income and other coverage eligibility.

 

Q: This is NOT MEANT for those that quit their jobs correct?
A: Yes

 

Q: Employee was terminated 9/1/08 and did not elect COBRA. Can qualified beneficiary now elect COBRA effective 3/1/09 and waive subsidy?
A: Yes

 

Q: Are employers responsible for notifying the former employee that the 9 months are ending? Should this information be included on the revised COBRA notices?
A: Yes, that is a notice requirement.

 

Q: Question on voluntary dental plans. Our employees pay 100% of dental premium on voluntarily elected dental coverage. Will we be responsible for 65% of the premium if they elect COBRA and are AEI?
A: If the plan is considered a group dental plan, subsidy must be offered.

 

Q: Does the 20 employee threshold include part-timers?
A: 20 full time employees per the CMS definition

 

Q: How much can the employer expect to recoup from the tax credit?
A: 100% of the 65% is reimbursable.

 

Q: If an employee passed away during the eligible period and the spouse is on COBRA, is the spouse an AEI?
A: If the deceased was involuntarily terminated since 9/1/08, the spouse is entitled to the subsidy.

 

Q: Can you clarify the buy-down rules for those AEIs who want a lower cost plan?
A: If the employer offers this option, and offers more than one plan, the AEI can opt to purchase less expensive coverage.

 

Q: How do I address increases in rates that become effective during this 9 month subsidy?
A: Rate changes are passed on to AEIs.

 

Q: Is it required (or recommended) that notices be sent to AEIs via certified mail. This could be costly to the employer.
A: No