Transcript www.trion.com
THE COBRA SUBSIDY AND THE ARRA: WHAT EVERY EMPLOYER NEEDS TO KNOW AND HOW TRION CAN HELP
TRION AND OBERMAYER REBMANN MAXWELL & HIPPEL LLP MARCH 12, 2009 WEBINAR PRESENTERS:
• • William T. Holmes II, RHU; [email protected]
Jacob M. Sitman, Esquire; [email protected]
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QUESTION AND ANSWER DIALOGUE AT END OF WEBINAR
At the end of this webinar, at approximately 2:00 p.m. EST, we will answer questions. To facilitate the Q & A process, please direct your questions to the email address below by right-clicking and clicking on: Open Hyperlink. 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.
©2009 Trion. All Rights Reserved.
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AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 (ARRA)
• • • • • • • • Signed by President Barack Obama on February 17, 2009.
Addresses expensive nature of COBRA coverage for individuals who have lost their jobs due to current economic conditions.
Took effect immediately upon enactment.
The DOL and IRS are working to prepare models for required notices, as well as interpretive regulations.
COBRA subsidy of 65% for nine months to Assistance Eligible Individuals (“AEIs”) Second chance for would-be AEIs to elect COBRA continuation coverage Option to permit enrollment in less expensive plan coverage (if offered by the employer) New notices of (1) the availability of COBRA premium reduction, (2) the second chance election opportunity, and (3) less expensive plan coverage option
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AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 (ARRA) (con’t)
• Option to permit enrollment in less expensive plan coverage (if offered by the employer) • New notices of (1) the availability of COBRA premium reduction, (2) the second chance election opportunity, and (3) less expensive plan coverage option
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THE COBRA SUBSIDY
Only AEIs are eligible for the subsidy – those are 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.
-
TO DO:
Identify all employees involuntarily terminated 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.
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
TRION’S PLANS AND ACTIONS:
– Trion will provide clients who have not already communicated the termination reason with online access to all of their employees who had a qualifying event date on or after September 1, 2008.
– The list will include all employees from September 1, 2008, to the date of the access. This access date will be tied to the availability of the model notice which is scheduled to be released by the DOL not later than March 19, 2009.
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THE COBRA SUBSIDY TO DO:
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. • •
TRION’S PLANS AND ACTIONS:
Trion is in the process of modifying our systems and processes to capture termination reason. Since our clients’ methods of transmitting data to Trion vary greatly, we work on solutions that work best on an individual client basis.
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THE COBRA SUBSIDY HOW MUCH AND FOR HOW LONG?
• • • • • Subsidy applies to periods of COBRA coverage beginning on or after February 17, 2009 (i.e., begins with March COBRA premiums for most plans) No “reach-back” No pre-existing condition exclusion problems related to gap in coverage for AEIs who elect COBRA pursuant to ARRA Requires individual to pay 35% of the COBRA premium (employer pays 65%, and seeks reimbursement from federal government through payroll tax credit) Lasts a maximum of nine (9) months (subsidy ends sooner if the COBRA coverage period expires, or coverage is no longer required)
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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 $125k/$250, and eliminated at $145k/$290k) Possible written waiver for high-income individuals
TO DO:
Active qualified beneficiaries need to be issued new payment coupons once they have been identified as premium subsidy eligible. Coupons must clearly indicate the new employee premium obligation.
©2009 Trion. All Rights Reserved.
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THE COBRA SUBSIDY TRION’S PLANS AND ACTIONS:
• Trion is working on solutions to accomplish the billing requirements contained in the Premium Assistance for COBRA Benefits. • New payment coupons will be issued no later than April 18, 2009.
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COBRA SUBSIDY
• • • •
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 IRS reporting requirements for reimbursement include: – 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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COBRA SUBSIDY
HOW TO CALCULATE AND GET REIMBURSED (con’t) TO DO:
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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SECOND CHANCE COBRA ELECTION OPPORTUNITY
• For individuals who would be AEIs, but (1) did not elect COBRA when offered the first time, or (2) 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
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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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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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NEW COBRA NOTICE REQUIREMENTS
New General Notice Requirement – Notice of subsidy, “second chance” opportunity (and lower cost plan option – if applicable) – Notice must be provided: • Within 60 days of enactment of ARRA (or during regular COBRA notice timeframe) • To all individuals eligible to elect COBRA continuation coverage during the subsidy period – Notice must include specific requirements – DOL will issue model notices by March 19, 2009 New “Second Chance” Notice Requirement – Content is same as new general notice – Notice must be provided: • Within 60 days of enactment of ARRA • To potential AEIs only (those who were entitled to elect COBRA before, but do not have coverage on or after February 17, 2009) 17
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NEW COBRA NOTICE REQUIREMENTS (con’t)
TO DO:
The Department of Labor is required to draft a new COBRA model notice that contains the information necessary to comply with the new notification requirements rely on the model DOL notice or create your own. -
Some of the key inclusions are:
A description of the extended election period A description of the obligation of the qualified beneficiary’s to notify the plan of eligibility for subsequent coverage A prominent description of the qualified beneficiary’s right to reduced premium A prominent description of any conditions on entitlement of the reduced premium Must include forms necessary to establish eligibility
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NEW COBRA NOTICE REQUIREMENTS (con’t) TRION’S PLANS AND ACTIONS:
While it is possible to create and issue qualifying event notices based on the initial legislation, Trion believes it is 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.
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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)
©2009 Trion. All Rights Reserved.
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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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Q & A SESSION
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