Legislation signed in late 2009 made key changes to the government’s health coverage premium subsidy program, including extending the eligibility through Feb. 28.
President Obama signed the 2010 Department of Defense Act on Dec. 19, extending two major aspects of the Consolidated Omnibus Budget Reconciliation Act’s health care continuation coverage premium subsidy program. That subsidy began in February 2009 as a result of the American Recovery and Reinvestment Act, helping to keep health insurance coverage in place for those affected by layoffs and unemployment.
Under the DOD Act, some components of the COBRA subsidy are unchanged. The subsidy is still a 65 percent reduction in the COBRA premiums that must be paid by the affected employees. To be eligible, they must be involuntarily terminated.
A key change under the DOD Act, however, extends the eligibility period until Feb. 28. Initially, the nine-month subsidy was only available for covered employees and their spouses or dependents, if the qualifying event – or involuntary job loss – occurred between Sept. 1, 2008, and Dec. 31, 2009.
The DOD Act also extends to 15 months the maximum period that assistance-eligible individuals, or AEIs, can receive the subsidy.
Since the stimulus-funded COBRA subsidy applied to health care continuation coverage that began on or after Feb. 15, 2009, many AEIs used up the nine-month subsidy eligibility in November 2009 and became otherwise exhausted individuals, or OEIs. Some OEIs lost their subsidies and paid the full premium for December 2009 and January 2010. They must be reimbursed 65 percent of the COBRA premium(s) paid or provided with a credit for future coverage. The credit must be applied within 180 days of payment.
Other OEIs did not elect COBRA coverage in December 2009 due to the personal expense of paying 100 percent to 105 percent of the premium. Under the DOD Act, OEIs who qualified for and chose the nine-month subsidy, depleted the entitlement, and stopped their unsubsidized COBRA coverage may retroactively elect the extra six months of subsidized COBRA coverage. They must also retroactively pay 35 percent of the premiums by Feb. 17 or within 30 days from the employer notice, whichever is later.
The employer notice must be supplied within the first 60 days of the transition period, which is defined as the first coverage period before Dec. 19, 2009, in which the premium subsidy pertains based upon the time extension. The Department of Labor has issued model notices that can be found at www.dol.gov.
Under the wording of the ARRA, an individual involuntarily terminated in December 2009, but whose coverage was not lost until January 2010, should have been an AEI but was not classified as such. The act stated that an employee must have been involuntarily terminated and have actually lost health care coverage during December. The DOD Act amended the language to clarify that the employee becomes an AEI based on the date of involuntary termination, which is the qualifying event, not the date coverage actually was lost.
The DOD Act mandates several action items:
• Modify COBRA notices to reflect the COBRA subsidy extension and amended language under the DOD Act;
• Identify and provide the employer notice of the DOD Act extension. For anyone who became an AEI after Oct. 31, 2009, the deadline for notification is Feb. 17;
• Determine who dropped COBRA coverage or paid the full premium after their nine-month subsidy period ended and who is entitled to the DOD Act COBRA subsidy extension; and
• Ascertain who is now an AEI under the DOD Act but was not considered an AEI under the ARRA.
Lynne Haggerman, M.S., is president/owner of Lynne Haggerman & Associates LLC, a Springfield firm specializing in management training, retained search, outplacement and human resource consulting. She can be reached at lynne@lynnehaggerman.com.[[In-content Ad]]
