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Consolidated Omnibus Budget Reconciliation Act:Provision under the American Recovery and Reinvestment Act of 2009,[object Object],Casey Enevoldsen,[object Object],Human Resources Intern,[object Object],Chippewa County-Montevideo Hospital (CCMH),[object Object],August 2009,[object Object]
Objectives,[object Object]
Purpose,[object Object],To obtain a basic understanding of COBRA and the new provision set forth by the American Recovery and Reinvestment Act of 2009 (ARRA).,[object Object]
Overview of COBRA,[object Object],What is COBRA?,[object Object],“The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.”,[object Object],United States Department of Labor, "Continuation of Health Coverage - COBRA". United States Department of Labor. August 10, 2009 			<http://www.dol.gov/dol/topic/health-plans/cobra.htm>. ,[object Object]
Overview of COBRA (cont.),[object Object],Who is eligible for COBRA?,[object Object],Employees who voluntarily or involuntarily terminate their employment for reasons other than gross misconduct.,[object Object],Reduced hours of work that would cause the employee to lose health benefits.,[object Object],The covered employee becoming eligible for Medicare.,[object Object],An individual who becomes divorced or legally separated from the covered employee.,[object Object],Death of a covered employee (family can continue coverage under COBRA).,[object Object],The loss of status of a dependent child under plan rules.,[object Object],**First two bullets are eligible for up to 18 months of continued health benefits under COBRA.  Last four bullets are eligible for up to 36 months of continued health benefits under COBRA.,[object Object]
Overview of COBRA (cont.),[object Object],What is the cost of health coverage under COBRA?,[object Object],If the individual elects COBRA continuation coverage, that individual could be responsible for up to 102% of the cost of the plan.,[object Object],100% of the total premium + 2% administration fee.,[object Object]
Overview of COBRA (cont.),[object Object],How long does an individual have to elect COBRA?,[object Object],Employer, Plan, or Insurer has 14 days after the termination date to send an election notice.,[object Object],Individuals have 60 days after they have received an election notice from the plan administrator to elect heath care coverage under COBRA.,[object Object]
Provision under the ARRA:Assistant Eligible Individual (AEI),[object Object],Allows individuals, who are qualified beneficiaries, to pay only 35% of the total cost of their current health plan under COBRA.  Individuals can take advantage of the AEI program until the earliest of:,[object Object],9 months of utilization;,[object Object],Becoming eligible under another group health plan or Medicare; or,[object Object],Reach their COBRA continuation coverage expiration date.,[object Object],The remaining 65% of the total premium cost is reimbursed through a payroll tax credit to the employer, plan, or insurer.  ,[object Object],**Employer, Plan, or Insurer will be reimbursed quarterly by filing an IRS Form 941.,[object Object],This premium subsidy includes any administrative fees that could be associated with COBRA.  For example, if an individual was paying 102% of the total cost of the premium, an AEI would only be responsible for paying 35% of the 102% cost.,[object Object]
Qualified Beneficiary,[object Object],Must have lost their health coverage as the result of an involuntary termination between September 1, 2008 and December 31, 2009;,[object Object],Are eligible for COBRA continuation coverage at any time during the period;,[object Object],Elect COBRA coverage.  ,[object Object],Qualified Beneficiaries include: ,[object Object],Employee;,[object Object],Spouse of the employee;,[object Object],Dependent child of the employee.,[object Object]
What Constitutes Involuntary Termination?,[object Object],The Internal Revenue Service (IRS) defines an involuntary termination as follows:,[object Object],Termination from employment indefinitely,[object Object],Layoff,[object Object],Reduction in hours,[object Object]
Scenario,[object Object],Lindsey, an RN at CCMH, had a reduction in hours on February 23, 2009, which makes her ineligible for health coverage.  Kristen, Lindsey’s domestic partner, and Kayla, their dependent child, were covered under Lindsey’s health insurance prior to February 23.,[object Object],Is Lindsey, Kristen, and Kayla eligible for COBRA continuation coverage?,[object Object],If so, would they be eligible for AEI?,[object Object],Why?,[object Object]
ScenarioSolution,[object Object],Yes, all three are eligible for COBRA continuation coverage.,[object Object],However, Kristen is not eligible to elect COBRA for herself.  Only Lindsey and Kayla are legally able to elect COBRA coverage because only Lindsey and Kayla are considered qualified beneficiaries. ,[object Object],Lindsey may elect COBRA coverage on behalf of Kristen.,[object Object],Lindsey and Kayla are eligible for AEI, however Kristen is not because she is not consider a qualified beneficiary.,[object Object],To figure out how much Lindsey would be responsible to pay for COBRA continuation coverage, we must use a incremental cost approach.,[object Object],Example:,[object Object],Lindsey takes out a Family Plan under COBRA to cover all three family members.	,[object Object],	Family Plan: $1,000		Only Employee + 1 Plan would be eligible for AEI.  Lindsey would pay Employee + 1: $800		only 35 % of $800 and she would then be responsible for the remaining,[object Object],	Employee: $450		$200 to have Kristen covered under COBRA.,[object Object]
Denials of the AEI Program,[object Object],If an individual is denied as an AEI, he/she can request an expedited review by the Department of Labor (DOL) or the Department of Health and Human Services (HHS).,[object Object],DOL – process expedited reviews received from organizations not regulated by ERISA.,[object Object],HHS – process expedited reviews received from organizations that are regulated by ERISA.,[object Object],Legally obligated to make a determination within 15 business days upon receipt of the completed expedited review.,[object Object]
Overpayment of COBRA Premiums,[object Object],If an individual has over paid on their premium costs there are two ways an individual can be reimbursed.,[object Object],The employer, plan, or insurer can put the amount that the individual over paid towards future premium costs, if the total amount the individual overpaid is completely reimbursed within 180 days.,[object Object],If the total amount cannot be fully reimbursed in 180 days, the individual must be reimbursed within 60 days from the employer, plan, or insurer.,[object Object]
Income Limits under AEI,[object Object],While the individual is receiving the COBRA premium subsidy, that individual is restricted on how much they are able to earn within that particular year.,[object Object],Earn more than $145,000 ($290,000 for joint filers),[object Object],Must pay a 110% penalty tax that is based upon the total amount that individual received in a premium subsidy.,[object Object],Earn between $125,000-$145,000 ($250,000-$290,000 for joint filers),[object Object],Must pay the total amount the individual received in a premium subsidy.,[object Object]
Responsibilities of the Employer,[object Object],As of February 17, 2009, the Plan Administrator had 60 days to notify all qualifying individuals that they were eligible for AEI and the special COBRA election opportunity.,[object Object],Types of Notifications:,[object Object],General Notice,[object Object],Abbreviated General Notice,[object Object],Alternative Notice,[object Object],Extended Election Period Notice,[object Object],**For further explanation refer to the comparison chart located on the next slide.,[object Object],Switching Benefit Options,[object Object],Employer not obligated,[object Object],Benefit Option must be of equal or lesser value.,[object Object]
*Information included in this chart was taken from the U.S. Department of Labor,[object Object],United States Department of Labor, "Notices". United States Department of Labor. August 11, 2009 ,[object Object],               <http://www.dol.gov/ebsa/COBRAmodelnotice.html>.,[object Object],Employee Notification Comparison Chart,[object Object]
Responsibilities of the Employee,[object Object],Elect COBRA continuation coverage within 60 days of an election notice from the Plan Administrator.,[object Object],Obligated to inform their Plan Administrator if they are/become eligible for health coverage under a spouses plan or through Medicare.,[object Object],Understand that their gross income during the year they receive ARRA is restricted.,[object Object]
Questions?,[object Object]
References,[object Object],United States Department of Labor, "Fact Sheet: Consolidated Omnibus Budget Reconciliation Act (COBRA)". U.S. Department of Labor. August 11, 2009 ,[object Object],		<http://www.dol.gov/ebsa/pdf/fsCOBRA.pdf>. ,[object Object],United States Department of Labor, "Continuation of Health Coverage - COBRA". United States Department of Labor. August 11, 2009 	<http://www.dol.gov/dol/topic/health-plans/cobra.htm>.,[object Object],Employee Benefits Security Administration, "Fact Sheet: COBRA Premium Reduction". United States Department of Labor. August 11, 2009 	,[object Object],		<http://www.dol.gov/ebsa/pdf/fsCOBRApremiumreduction.pdf>.,[object Object], ,[object Object],United States Department of Labor, "Notices". United States Department of Labor. August 11, 2009 ,[object Object],	<http://www.dol.gov/ebsa/COBRAmodelnotice.html>.,[object Object],Employee Benefits Security Administration, COBRA Provisions in the American Recovery and Reinvestment Act of 2009 Compliance Assistance Webcast. United States Department of Labor. August 11, 2009 	,[object Object],	<http://w.on24.com/r.htm?e=139337&s=1&k=3A818D91BC18D31F024968D47757389D>.,[object Object]

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Consolidated Omnibus Budget Reconciliation Act - Provision under the American Recovery and Reinvestment Act of 2009

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