Last week, legislation was introduced to extend and enhance the COBRA subsidy. The proposed legislation would extend the current subsidy by another 6 months, continuing the health care coverage to laid-off workers and their families.


If the bill passes and is enacted, employers will have to once again inform all their affected participants of the new changes and the extension. Under the proposal, the allowable time individuals qualify for COBRA benefits will grow from nine to 15 months and affect those involuntarily terminated between Jan. 1, 2010 and June 30, 2010. The bill will also allow the subsidy to those who have had their hours reduced and no longer qualify for employer-sponsored health plans. The subsidy amount would also increase from 65 percent to 75 percent of the participant’s premium.


Employers will be affected on all levels by this proposed bill. The bill includes several reforms, many of which are effective as of Jan. 1, 2010.

Some of the reforms include:

• Extending coverage for dependents through age 26 who are not covered by another group health plan.
  
• Limiting preexisting condition exclusions and shortening the limitation period from six months to 30 days.
  
• Eliminating lifetime limits on certain benefits.
  
• Banning health plans from reducing retiree benefits. However, you could terminate retiree coverage for future retirees.
  
• Forming a retiree reinsurance program to reduce participant costs.
  
• Providing grants to small businesses for wellness programs.
  
• Extending COBRA coverage for participants until they qualify for other coverage or until the new insurance exchange in 2013.
  
• Setting minimum employer contributions for full-time and part-time employees and establishing penalties those who offer non-qualifying health coverage. This portion would take effect in 2013.
  

What do you need to do if ARRA’s COBRA Continuation Assistance is extended?

If the bill passes, you will need to act quickly. Plan to alert all COBRA participants immediately! Develop a communications plan, inform participants of the new extension date and explain all the new changes and how they affect the participants.

Did You Know?

Since the government enacted the American Recovery and Reinvestment Act of 2009 (ARRA) to make health care more affordable, COBRA enrollments have doubled. Because of the high unemployment rates (the highest in 25 years), it is estimated that more than 14 million people are eligible for the COBRA subsidy. Before the new act, COBRA participants paid nearly $8,800 a year in health care premiums. Under ARRA, participants currently pay 35 percent of the COBRA premium, which is about $3,000 a year.

Connections

When should you notify COBRA participants if the extension proposal passes?

Preparing communications before the bill passes (if it passes) will give you a jumpstart on informing participants of impending changes. Having the proper documents ready to go if the bill is enacted will increase the timeliness of informing your participants.Make sure to include all the changes included in the bill, how it affects participants, how their payments will change, and how the new timelines affect them. By keeping participants prepared for upcoming changes, you’ll eliminate surprises and improve your collection success.  Once participants are informed of the extension, continue with the notification schedule that informs participants of impending deadlines and expirations.

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