Article: Help with COBRA payments for the unemployed

Hopefully the following information will be helpful to affected individuals:

The American Recovery and Reinvestment Act of 2009 (the Act), more commonly referred to as the economic stimulus package, signed by President Obama on Tuesday, February 17, 2009, includes several important provisions that affect COBRA continuation coverage and places new requirements on employers. Most notably, certain COBRA beneficiaries may be eligible for a 65% discount on their COBRA premiums for a limited period of time.

Eligibility Requirements
For the new COBRA provisions to be triggered, an individual (referred to in the new law as an assistance eligible individual) must have been involuntarily terminated from employment during the period from September 1, 2008, to December 31, 2009. The reduced COBRA premium applies for a period not to exceed nine months and can terminate earlier if either of the following occurs: (a) the individual is eligible for Medicare benefits or coverage under another group health plan (flexible spending accounts, dental, and vision coverage and other certain benefits are excluded) or (b) the maximum period of continuation coverage required under COBRA expires.

If an assistance eligible individual who is receiving the subsidy subsequently becomes eligible for coverage under another group health plan or Medicare, he or she must notify in writing the group health plan providing the COBRA coverage. If the beneficiary fails to provide the notification and continues to receive the subsidy, the individual will be subject to a tax penalty equal to 110% of the subsidy received after ineligibility.

Income Cap and Waiver
Also, the Act includes certain maximum income levels at which an individual is no longer eligible for the subsidy or is eligible for a reduced subsidy. If an individual's modified adjusted gross income exceeds $145,000 (or $290,000 for joint filers), he or she will not be eligible for the subsidy for that taxable year. If an individual's modified adjusted gross income is between $125,000 and $145,000 (or $250,000 and $290,000 for joint filers), then he or she will be entitled to a proportionately reduced premium subsidy. Overpayments will be repaid through an increase to the taxpayer's income tax liability. Individuals have the option under the Act to waive the right to premium assistance, which could help high income individuals avoid recapture. The waiver, however, is a one-time, permanent election.

Coverage Options
An assistance eligible individual may, in certain circumstances, elect to enroll in different coverage that is available under the health plan to active employees. Employers can decide whether to offer such eligible individuals additional coverage options.

Plans Not Subject to COBRA
The subsidy applies not only to coverage required to be offered under the COBRA rules, but also to similar continuation coverage required under State law for group health plans not subject to COBRA and to Federal or State government-maintain ed health plans. Health flexible spending accounts are not eligible for the subsidy.

Special Election Period
For those eligible individuals who are eligible for the subsidy but who did not originally elect COBRA coverage, or who did elect COBRA coverage and subsequently terminated it, the Act provides for a new 60-day election period, beginning on the date that notice is provided to the assistance eligible individual. Employers must notify these assistance eligible individuals of the special election period within 60 days of the enactment of the Act. This 60-day election period will not extend the period of COBRA continuation coverage beyond the original maximum period required by COBRA. Once an individual elects coverage, the coverage begins on or after the date of enactment of the Act and does not include any prior period.

For qualified beneficiaries who elect COBRA coverage under this special 60-day election period, the period from the qualifying event (the involuntary termination of the covered employee) to the date of enactment will not be counted as a break in coverage, whereby a plan may refuse to cover preexisting conditions.

Notices and Forms
The usual COBRA notice provided to qualified beneficiaries must now include forms to establish eligibility for the subsidy as well as information about the beneficiary' s right to the subsidy, the conditions on the subsidy, a description of the beneficiary' s obligation to notify the group health plan of eligibility under another group health plan or for Medicare benefits, and the penalty if the beneficiary fails to provide this notification. As previously mentioned, employers must also provide notice to those individuals who qualify for the special 60-day election period. Employers whose group health plans are not subject to the COBRA continuation coverage requirements but still qualify for the subsidy, must provide notice to the assistance eligible individuals. The Act directs the Secretary of Labor to provide model notices within 30 days of enactment of the Act (February 17, 2009—date of enactment).

Bear in mind these provisions are very new so chances are your former employer and insurance provider may not yet have a handle on how to "flesh" this out (i.e., how to go about implementing it) so be patient with them as you deal with them.

Hope the above information helps....