On its website, the Department of Labor (the “DOL”) has added new facts and questions (“FAQs”) on the COBRA subsidy extension. The new FAQs are here. The new FAQs say the following.
The federal government’s stimulus package, which was enacted in February 2009 as the American Recovery and Reinvestment Act of 2009 (“ARRA”), temporarily reduces, for assistance eligible individuals, the premium for COBRA continuation health care coverage, or comparable State law continuation health care coverage (“COBRA coverage”). The premium reduction, called the “Subsidy”, reduces the premium for COBRA coverage to 35% of the amount of the premium that otherwise would be charged, and is available for 9 months. An “assistance eligible individual” is an individual who is eligible for COBRA coverage because of the individual’s own or a family member’s involuntary termination from employment that occurred during the period of September 1, 2008 through December 31, 2009. An individual who is eligible for other group health coverage (such as a spouse’s plan) or Medicare, or who is otherwise not entitled to COBRA coverage, is not eligible for the Subsidy.
The Department of Defense Appropriations Act of 2010 (“DODA”) was signed by the President on December 19, 2009. DODA amended ARRA to extend:
— the period during which the involuntary termination of employment must occur to qualify for the Subsidy for two months (from January 1, 2010 to February 28, 2010); and — the maximum period for receiving the Subsidy for an additional six months (from nine to 15 months).
DODA creates a “transition period”, which begins immediately after the end of an individual’s 9 month period of entitlement to the Subsidy under ARRA prior to its amendment. If an individual’s transition period starts in December, and the individual fails to pay the December and January premiums (the “Late Premiums”) for COBRA coverage, the individual will be able to reinstate his or her COBRA coverage, and receive the additional six months of the Subsidy, so long as the Late Payments are made retroactively, by the latest of: February 17, 2010, 30 days after the notice (described below) was provided, or the end of the otherwise applicable grace period under the applicable plan for the Late Payments. An individual in a transition period must be provided notice of the extension of the Subsidy within 60 days after the first day of the period. The notice must include information on the extension of the Subsidy from 9 to 15 months, and inform the individual that he or she may make the Late Payments retroactively.
Also, if the individual’s transition period starts in December, and the individual already paid the full December premium, then the individual should contact the plan administrator, employer sponsoring the plan, or insurance issuer to discuss obtaining, due to the extended Subsidy, a refund or credit against future premium payments. If this individual receives a bill for 100% of the December premium, he or she should pay only 35% of the premium, by the later of February 17, 2010 or 30 days after notice of the Subsidy extension is provided by the plan administrator. Furthermore, this individual may pay only 35% of the December premium, even if he or she has not yet received an updated bill or the notice described above from the plan administrator.
The FAQs remind us that, if an individual’s plan or insurer determines that he or she is not eligible for the Subsidy, the individual can request an expedited review of the denial from the DOL (for private sector plans) or the Department of Health and Human Services (for Federal, State, and local government employees, as well as continuation health care coverage under State law).
The FAQs also discuss the notices that a plan administrator must provide to an individual under ARRA, as amended by DODA-to be covered in a future blog.