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THE COBRA SUBSIDY AND THE ARRA: NEW INFORMATION AND
TRION’S NEXT STEPS FOR IMPLEMENTATION
WELCOME
Trion Webinar - March 19, 2009
Trion Speakers:
• Nancy Ciganik, Compliance Manager
• Frank Dallago, Director, COBRA Administration
• Jerry McGlone, Client Leader
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©2009 Trion. All Rights Reserved.
AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009
TODAY’S AGENDA
• American Recovery and Reinvestment Act of 2009
• Amount and Duration of the Premium Assistance / COBRA Subsidy
• Eligibility and Enrollment Provisions
• Notification Requirements
• Sample Notices
• Method of Employer Reimbursement
• Additional Administrative Provisions
• Timeline / Next Steps
• Trion Contact Information
• Question and Answer Session
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©2009 Trion. All Rights Reserved.
QUESTION AND ANSWER DIALOGUE AT END OF WEBINAR
•
At the end of this presentation, at approximately 2:00 p.m. EDT, we will
answer questions. To facilitate the Q & A process, please click on the
chat panel on the bottom right section of your screen.
•
The Q & A session will be audio only and we will address as many
questions as we have time to answer.
Within one week of this webinar, a document answering ALL questions
will be posted to the Trion COBRA website.
•
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©2009 Trion. All Rights Reserved.
THE COBRA SUBSIDY
American Recovery and Reinvestment Act of 2009 (ARRA)
• Effective date – February 17, 2009.
• Government provided subsidy of 65% of the COBRA premium.
• Applies to all plans subject to continuation coverage other then Health
Flexible Spending Accounts (Examples – medical, dental, and vision
plans).
• Continuation coverage can be federal COBRA or state mini-COBRA
laws.
• The DOL issued model notices earlier today.
• Expecting additional IRS regulatory guidance to be released.
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©2009 Trion. All Rights Reserved.
THE COBRA SUBSIDY
AMOUNT AND DURATION OF THE SUBSIDY
• Government provided subsidy of 65% of the COBRA premium.
– Requires individual to pay 35% of the COBRA premium (employer
pays 65%, and seeks reimbursement from federal government
through payroll tax credit).
• Subsidy applies to periods of COBRA coverage beginning on or after
February 17, 2009 (i.e., begins with March COBRA premiums for most
plans).
• Lasts a maximum of nine months (subsidy ends sooner if the COBRA
coverage period expires or individual is no longer eligible).
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THE COBRA SUBSIDY
ELIGIBILITY AND ENROLLMENT PROVISIONS
• Only Assistance Eligible Individuals (AEIs) are eligible for the subsidy – those
individuals who:
– are eligible for COBRA continuation coverage at any time between
September 1, 2008, and December 31, 2009, because of “involuntary
termination” of employment that occurred during that time period; and
– elect COBRA continuation coverage.
• No “reach-back” coverage begins with first period of coverage on or after
February 17, 2009.
KEY DEFINITION
• Involuntary termination - employees who are terminated by employer action
(other than for gross misconduct). If an individual is terminated for gross
misconduct, s/he is not eligible for COBRA coverage.
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THE COBRA SUBSIDY
ELIGIBILITY AND ENROLLMENT PROVISIONS
•
Existing AEIs
– Eligible AEIs who are currently enrolled in COBRA coverage.
– Must be notified of availability of subsidy under the ARRA.
– NOTE: The DOL sample notice released today provides an election
form for existing AEIs.
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THE COBRA SUBSIDY
ELIGIBILITY AND ENROLLMENT PROVISIONS
•
SECOND CHANCE COBRA ELECTION OPPORTUNITY
– For individuals who would be AEIs, but
• did not elect COBRA when offered the first time, or
• no longer are enrolled in COBRA.
– Individuals may elect COBRA coverage to begin upon enactment of ARRA,
and end no later than the expiration of the maximum COBRA period
(measured from the involuntary termination of employment date/loss of
coverage).
– Individuals must elect coverage within 60 days from the date of notice of the
“second chance” to elect COBRA.
– No pre-existing condition exclusion problems related to gap in coverage for
AEIs who elect COBRA pursuant to ARRA.
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THE COBRA SUBSIDY
TO DO
•
•
•
Identify all involuntarily terminated employees with a qualifying event date
beginning September 1, 2008, up to a current date and notify your benefits
administrator/broker - or whomever handles your COBRA administration.
Employers will need to establish a method for identifying involuntary
terminations on a “go forward” basis through at least December 31, 2009.
Many employers have not had the necessity to track reason for termination and
their internal systems may not currently accommodate the recording of that
information.
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©2009 Trion. All Rights Reserved.
THE COBRA SUBSIDY
TRION’S PLANS AND ACTIONS
NEW CLIENTS
• March 23 – Trion will provide clients new to Trion’s COBRA Administration
(clients with an effective date for Trion Administration of October 1, 2008, to
March 1, 2009) with a standard spreadsheet file for use in working with their
prior administrator or internal systems to obtain a complete list of COBRA
qualified beneficiaries. This file will be delivered via email with instructions.
EXISTING CLIENTS
• March 30 – Trion will provide a list to all active COBRA clients containing
COBRA terminations with a qualifying event date of September 1, 2008, to
March 29, 2009.
– COBRA Link will be updated to include a termination reason code.
– All clients submitting census files to Trion will be required to supply
termination reason codes either as part of the file process or through a
separate submission.
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THE COBRA SUBSIDY
IMPORTANT LIMITATIONS ON ELIGIBILITY FOR SUBSIDY
•
•
•
•
Eligibility terminates if AEI is eligible for coverage under any other group health
plan or Medicare.
AEIs must notify group health plan in writing if/when s/he becomes eligible for
other group health plan or Medicare coverage, or else 110% penalty.
Eligibility is limited or eliminated for high income individuals (phased out for
those with individual/joint annual income of at least $125,000/$250,000 and
eliminated at $145,000/$290,000).
Possible written waiver for high-income individuals.
REVIEW OF PREMIUM ASSISTANCE DENIALS
•
•
The DOL will conduct expedited review of cases where individuals request
treatment as AEIs and are denied.
Individuals will apply to DOL for review and DOL will make eligibility
determinations within 15 business days.
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THE COBRA SUBSIDY
PERMITTING CHANGE TO LOWER COST HEALTH CARE PLAN
(OPTIONAL)
•
•
Ordinarily, COBRA continuation coverage is the level and type of coverage in
effect on the day preceding the COBRA qualifying event.
Now, employers may (but need not) permit AEIs to change coverage to a lower
(or same) cost health care plan option, so long as:
– AEI makes election within 90 days of notice;
– Option elected is also available to active employees (and is not dental,
vision or EAP only, health FSA or employer on–site medical facility); and
– Premium is less than or equal to coverage in effect upon qualifying event.
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THE COBRA SUBSIDY
TO DO
•
Determine if the lower cost health care plan option will be offered.
TRION’S PLANS AND ACTIONS
•
Due to the administrative complexities of offering the alternative coverage
election, Trion is not recommending plan sponsors provide this option to AEIs.
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NEW COBRA NOTICE REQUIREMENTS
NEW GENERAL NOTICE REQUIREMENT
•
•
•
•
Notice of subsidy availability.
Notice must be provided:
– Within 60 days of enactment of ARRA (or during regular COBRA notice timeframe);
– To all qualified beneficiaries eligible to elect COBRA continuation coverage during the
subsidy period – regardless of the type of qualifying event.
DOL sample notices:
– “Full Version” of the DOL model notice includes information on the premium reduction as
well as information required in a COBRA election notice.
– “Abbreviated Version” of the DOL model notice may be sent in lieu of the full version to
individuals who experienced a qualifying event during on or after September 1, 2008, and
elected COBRA coverage and are currently enrolled.
– These notices are for plans subject to the Federal COBRA provisions.
Link to the DOL sample notices is available at http://www.trion.com/cobra/
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NEW COBRA NOTICE REQUIREMENTS
NEW “SECOND CHANCE” NOTICE REQUIREMENT
•
•
•
•
•
Notice of second chance enrollment opportunity.
Notice must be provided:
– Within 60 days of enactment of ARRA;
– To potential AEIs only who had a qualifying event date from September 1, 2008, through
February 16, 2009 (those who were entitled to elect COBRA before, but do not have
coverage on February 17, 2009);
– Notice must include specific requirements.
DOL sample notice:
– “Notice in Connection with Extended Election Periods” – this DOL model notice includes
information on ARRA’s additional election opportunity, as well as premium reduction
information.
– These notices are for plans subject to the Federal COBRA provisions.
This notice must be provided by April 18, 2009.
Link to the DOL sample notices is available at http://www.trion.com/cobra/
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SAMPLE NOTICES
•
SUMMARY OF THE COBRA PREMIUM REDUCTION PROVISIONS UNDER ARRA
Summary of the COBRA Premium
Reduction Provisions under ARRA
President Obama signed the American Recovery and Reinvestment Act (ARRA) on February 17, 2009. The
law gives “Assistance Eligible Individuals” the right to pay reduced COBRA premiums for periods of coverage
beginning on or after February 17, 2009 and can last up to 9 months.
To be considered an “Assistance Eligible Individual” and get reduced premiums you:
 MUST be eligible for continuation coverage at any time during the period from September 1, 2008
through December 31, 2009 and elect the coverage;
 MUST have a continuation coverage election opportunity related to an involuntary termination of
employment that occurred at some time from September 1, 2008 through December 31, 2009;
 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.
Individuals who experienced a qualifying event as the result of an involuntary termination of employment at
any time from September 1, 2008 through February 16, 2009 and were offered, but did not elect, continuation
coverage OR who elected continuation coverage and subsequently discontinued it may have the right to an
additional 60-day election period.
 IMPORTANT 
◊
If, after you elect COBRA and while you are paying the reduced premium, you become eligible for
other group health plan coverage or Medicare you MUST notify the plan in writing. If you do not, you
may be subject to a tax penalty.
◊
Electing the premium reduction disqualifies you for the Health Coverage Tax Credit. If you are
eligible for the Health Coverage Tax Credit, which could be more valuable than the premium
reduction, you will have received a notification from the IRS.
◊
The amount of the premium reduction is recaptured for certain high income individuals. If the amount
you earn for the year is more than $125,000 (or $250,000 for married couples filing a joint federal
income tax return) all or part of the premium reduction may be recaptured by an increase in your
income tax liability for the year. If you think that your income may exceed the amounts above, you
may wish to consider waiving your right to the premium reduction. For more information, consult your
tax preparer or visit the IRS webpage on ARRA at www.irs.gov.
For general information regarding your plan’s COBRA coverage you can contact [enter name of party
responsible for COBRA administration for the Plan, with telephone number and address].
For specific information related to your plan’s administration of the ARRA Premium Reduction or to notify the
plan of your ineligibility to continue paying reduced premiums, contact [enter name of party responsible for
ARRA Premium Reduction administration for the Plan, with telephone number and address].
If you are denied treatment as an “Assistance Eligible Individual” you may have the right to have the denial
reviewed. For more information regarding reviews or for general information about the ARRA Premium
Reduction go to:
www.dol.gov/COBRA or call 1-866-444-EBSA (3272

Generally, this does not include coverage for only dental, vision, counseling, or referral services; coverage under a health flexible
spending arrangement; or treatment that is furnished in an on-site medical facility maintained by the employer.
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SAMPLE NOTICES
•
REQUEST FOR TREATMENT AS AN ASSISTANCE ELIGIBLE INDIVIDUAL
To apply for ARRA Premium Reduction, complete this form and return it to us along with your Election Form.
You may also send this form in separately. If you choose to do so, send the completed “Request for Treatment
as an Assistance Eligible Individual” to: [Enter Name and Address]
You may also want to read the important information about your rights included in the “Summary of the COBRA
Premium Reduction Provisions Under ARRA.”
[Insert Plan Name]
REQUEST FOR TREATMENT AS AN ASSISTANCE
ELIGIBLE INDIVIDUAL
PERSONAL INFORMATION
Name and mailing address of employee (list any dependents on the back of
[Insert Plan Mailing
Address]
Telephone number
this form)
E-mail address (optional)
To qualify, you must be able to check ‘Yes’ for all statements.*
1. The loss of employment was involuntary.
2. The loss of employment occurred at some point on or after September 1, 2008 and on or before December 31, 2009.
3. I elected (or am electing) COBRA continuation coverage.*
4. I am NOT eligible for other group health plan coverage (or I was not eligible for other group health plan coverage
during the period for which I am claiming a reduced premium).
5. I am NOT eligible for Medicare (or I was not eligible for Medicare during the period for which I am claiming a reduced
premium).
*If you checked NO for statement 3, you may still be eligible. See below for more information.




 No
 No
 No
 No

 No
*ADDITIONAL ELECTION PERIOD*
If your COBRA continuation coverage relates to an involuntary loss of employment from September 1, 2008 through February 16, 2009
and you were eligible for, but did not elect, COBRA continuation coverage OR you elected but subsequently discontinued COBRA, you
may have the right to an additional 60-day election period. You should receive a new election notice with an Election Form which you
MUST complete and return. If you believe you should have received this additional notice but have not, contact [enter name of party
responsible for COBRA administration for the Plan, with telephone number and address].
I make an election to exercise my right to the ARRA Premium Reduction. To the best of my knowledge and belief all of the answers I have
provided on this form are true and correct.
Signature
__________________________________________________ Date
Type or print name
____________________________
__________________________________________ Relationship to employee _________________________
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SAMPLE NOTICES
•
PARTICIPANT NOTIFICATION OF INELIGIBILITY OF
This form is designed for plans to distribute to COBRA qualified beneficiaries who are paying reduced premiums
pursuant to ARRA so they can notify the plan if they become eligible for other group health plan coverage or
Medicare.
Use this form to notify your plan that you are eligible for other group health plan coverage or
Medicare and therefore not eligible for reduced premiums under ARRA.
Plan Name
Plan Mailing Address
Participant Notification
PERSONAL INFORMATION
Name and mailing address
Telephone number
E-mail address (optional)
PREMIUM REDUCTION INELIGIBILITY INFORMATION – Check one
I am eligible for coverage under another group health plan.
If any dependents are also eligible, include their names below.

Insert date you became eligible______________________
I am eligible for Medicare.

Insert date you became eligible______________________
IMPORTANT
If you fail to notify your plan of becoming eligible for other group health plan coverage or Medicare AND continue to
pay reduced COBRA premiums you could be subject to a fine of 110% of the amount of the premium reduction.
Eligibility is determined regardless of whether you take or decline the other coverage.
However, eligibility for coverage does not include any time spent in a waiting period.
To the best of my knowledge and belief all of the answers I have provided on this Form are true and correct.
Signature
__________________________________________________ Date
Type or print name
____________________________
_____________________________________________________________________________
If you are eligible for coverage under another group health plan and that plan covers dependents you must also list their
names here:
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SAMPLE NOTICES
•
FORM FOR SWITCHING BENEFIT OPTIONS
coverage that is different than coverage in which the individual was enrolled at the time the
qualifying event occurred.]
Form for Switching COBRA Continuation Coverage Benefit Options
Instructions: To change the benefit option(s) for your COBRA continuation coverage to something
different than what you had on the last day of employment, complete this form and return it to us.
Under federal law, you have 90 days after the date of this notice to decide whether you want to switch
benefit options.
Send completed form to: [Enter Name and Address]
This form must be completed and returned by mail [or describe other means of submission and due
date]. If mailed, it must be post-marked no later than [enter date].
*THIS IS NOT YOUR ELECTION NOTICE*
YOU MUST SEPARATELY COMPLETE AND RETURN THE ELECTION NOTICE TO SECURE
YOUR COBRA CONTINUATION COVERAGE.
I (We) would like to change the COBRA continuation coverage option(s) in the [enter name of
plan] (the Plan) as indicated below:
Name
Date of Birth
Relationship to Employee
SSN (or other identifier)
a. _________________________________________________________________________
Old Coverage Option: ____________________________
New Coverage Option: __________________________
b. _________________________________________________________________________
Old Coverage Option: ____________________________
New Coverage Option: __________________________
c. _________________________________________________________________________
Old Coverage Option: ____________________________
New Coverage Option: __________________________
_____________________________________
Signature
_____________________________
Date
______________________________________
Print Name
_____________________________
Relationship to individual(s) listed above
______________________________________
______________________________________
______________________________________
Print Address
______________________________
Telephone number
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©2009 Trion. All Rights Reserved.
NEW COBRA NOTICE REQUIREMENTS
TO DO
•
•
•
The DOL provided sample COBRA model notice that contains the information
necessary to comply with the new notification requirements.
You may rely on the model DOL notice or create your own while incorporating
the required language.
If your company provides payment coupons, all active qualified beneficiaries
need to be issued new coupons once they are have been identified as premium
subsidy eligible.
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NEW COBRA NOTICE REQUIREMENTS
TRION’S PLANS AND ACTIONS
•
•
•
•
While it was possible to create and issue qualifying event notices based on the
initial legislation, Trion determined that it was best for our clients to wait for the
DOL’s new model notice. This ensures that all necessary information is included
in the notice in an approved format.
Trion is working on solutions to accomplish the billing requirements contained in
the Premium Assistance for COBRA Benefits.
Trion will begin issuing new qualifying event notices for those COBRA eligible
and designated as involuntary terminations as received. The mailing date of
these notice will be March 31 through April 17.
New payment coupons will also be generated for those active COBRA
Beneficiaries who have been designated as involuntary terminations.
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HOW TO CALCULATE AND GET REIMBURSED
•
•
•
Calculate the 35% subsidized premium based on the COBRA premium amount
actually charged to COBRA participants (not the amount of the group healthcare
plan premium).
After the COBRA participant pays the 35%, apply the 65% amount of COBRA
premium paid by the employer as a credit against payroll taxes owed by the
employer on IRS Tax Form 941.
Satisfy IRS reporting requirements for reimbursement:
– attestation of involuntary termination;
– amount of subsidy claimed;
– estimated amount of subsidy for the next reporting period;
– SSNs of employees receiving subsidy, amount of subsidy reimbursed, and
whether coverage was for employee, employee +1/2, or family.
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HOW TO CALCULATE AND GET REIMBURSED
TO DO
•
•
•
Employers must calculate the 65% subsidy based on the COBRA premium
charged to, and paid by, the AEI.
In order for employers to be reimbursed for premium subsidies, monthly COBRA
activity reporting must be enhanced to capture and report on the premium
subsidy activity.
The employer will be required to provide the Internal Revenue Service with
some level of detail with filings of their 941 forms.
TRION’S PLANS AND ACTION
•
•
Trion is preparing enhancements to the reporting capabilities of its COBRA
platform.
We expect to have the reporting requirements clarified and programmed in
advance of any premium subsidy payments.
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TRANSITION RULE
REFUNDING OVERPAYMENT OF PREMIUMS
•
If AEI pays full COBRA premium (rather than 35% subsidized amount) for the
first or second premium coverage period following enactment of ARRA,
employers must either:
– Refund the AEI for the amount of overpayment (i.e., 65% of the premium
paid) within 60 days, or
– Issue a credit to the AEI in the amount of the overpayment to be applied to
future COBRA premiums owed by the AEI (but this is permitted only so long
as it is reasonable to believe the credit will be used within 180 days from
payment of the full premium).
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TRANSITION RULE
TO DO
•
Determine if a refund will be issued for the overpayment amount received during
the transition period or to issue a credit toward future premiums.
TRION’S PLANS AND ACTION
•
•
Trion is implementing processes to calculate and provide a credit to any AEI who
made an overpayment of their COBRA premiums.
For those AEIs that are unable to use the full credit prior to the termination of
COBRA coverage will receive a refund.
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TIMELINE REVIEW
COBRA subsidy
•
•
September 1, 2008 through December 31, 2009 – subsidy eligibility period.
March 19 – DOL model notification due.
Existing AEIs
•
April 18 – Notification deadline to all existing AEIs with revised payment coupons (if
utilized).
Second Chance Enrollment Opportunity AEIs
•
•
•
April 18 – Notification deadline to all AEIs eligible for the second chance enrollment option.
June 17 – AEIs who elect coverage under the second chance enrollment option have 60
days from notification to elect coverage.
July 31 – AEIs who elect COBRA under the second chance enrollment option have up to
45 days to submit initial payment.
AEIs eligible for subsidy on March 1
•
November 30 – 9 month subsidy period ends.
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TRION COBRA ADMINISTRATION COMMUNICATION
TIMELINE REVIEW
NEW CLIENTS
•
March 23 – Trion will provide clients new to Trion’s COBRA Administration
(clients with an effective date for Trion Administration of October 1, 2008 to
March 1, 2009) with a standard spreadsheet file for use in working with their
prior administrator or internal systems to obtain a complete list of COBRA
qualified beneficiaries. This file will be delivered via email with instructions.
EXISTING CLIENTS
•
March 30 – Trion will provide a list to all active COBRA clients containing
COBRA terminations with a qualifying event date of September 1, 2008 to March
29, 2009.
– COBRA Link will be updated to include a termination reason code.
– All clients submitting census files to Trion will be required to supply
termination reason codes either as part of the file process or through a
separate submission.
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TRION COBRA ADMINISTRATION COMMUNICATION
TIMELINE REVIEW
SUBMISSION DEADLINES


April 10 – deadline for submitting termination reason for COBRA terminations
with a qualifying event date of September 1, 2008 to March 29, 2009
April 17 – Clients are required to have updated census files containing the
termination reason code.
MAILING OF NEW NOTICES


March 31 to April 17 – Trion will begin issuing new qualifying event notices for
those COBRA eligible and designated as involuntary terminations as received.
New payment coupons will also be generated for those active COBRA
Beneficiaries who have been designated as involuntary terminations.
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TRION’S CLIENT RESOURCES
Trion has established numerous resources to further assist clients and address their
questions and concerns:
COBRA hotline – 610.945.1173
–
We have established a toll free COBRA hotline for you to call and personally speak with
a COBRA expert.
Directly routed email address - [email protected]
–
We have established an email address that feeds directly to an internal Trion COBRA
expert to answer your questions and meet your concerns.
Designated COBRA webpage - http://www.trion.com/cobra/
–
Trion’s has established a webpage specifically designated for COBRA which will house
a library of relevant information around the new legislation. This information includes,
but is not limited to, a FAQ section and a copy of the Federal legislation with guidance
regarding how it will impact you as an employer.
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QUESTION AND ANSWER DIALOGUE AT END OF WEBINAR
•
At this time, we will answer questions. To facilitate the Q & A process,
please click on the chat panel on the bottom right section of your
screen.
•
The Q & A session will be audio only and we will address as many
questions as we have time to answer.
Within one week of this webinar, a document answering ALL questions
will be posted to the Trion COBRA website.
•
31
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