The Temporary Extension Act of 2010 (the Act) was signed into law by President Obama on Tuesday, March 2, 2010. The Act extends the COBRA subsidy eligibility period originally introduced under the American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Department of Defense Appropriations Act, 2010, until March 31, 2010.

New Rules
Individuals who experienced a qualifying event that was a reduction in hours of employment, on or after September 1, 2008, and who later experienced an involuntary termination of employment as defined by ARRA between March 2 and March 31, 2010, are eligible for the subsidy if they are otherwise an Assistance Eligible Individual (AEI). This new rule only applies to periods of coverage beginning after March 2, 2010.

New Election Period
Individuals who experienced a qualifying event due to a reduction in hours of employment and did not elect COBRA coverage, or elected and then lost COBRA coverage, are entitled to a new COBRA election period if they later experience an involuntary termination of employment between March 2, 2010 and March 31, 2010.

Civil Action and Penalties
To enforce the provisions of ARRA and the Act, the Treasury and/or Department of Labor (DOL) or an affected individual may bring a civil action to enforce any determinations and/or appropriate relief. Plan sponsor or health carrier failure to comply with Treasury or DOL determinations within 10 days after receiving notice of the determination could result in $110 a day penalty.

Under the American Recovery and Reinvestment Act of 2009 (ARRA), the federal government pays 65 percent of COBRA premiums for up to 9 months for Assistance Eligible Individuals who were involuntarily terminated between September 1, 2008, and December 31, 2009.

An extension was signed into law by President Obama on Saturday, December 19, 2009 as part of the Department of Defense Appropriations Act of 2010 (H.R.3326). As a result:

• Eligible Individuals can now receive the COBRA subsidy for 15 months instead of the 9 months under ARRA. This will be cumulative, meaning that any months which have already been subsidized will be part of and count toward the 15 months.
• Eligibility of the subsidy will end on February 28, 2010 instead of December 31, 2009. This means that any COBRA-eligible individual that has been involuntarily terminated from their job before February 28, 2010 shall have the right to the subsidy.
• This legislation also allows those Eligible Individuals who exhausted their full 9-month COBRA subsidy period prior to the date of enactment (i.e. December 19, 2009), and who failed to make a timely premium payment during the transition period, to reinstate coverage upon payment of all applicable premiums within 60 days of the date of the enactment or, if later, 30 days after notice is provided.

Employer Responsibility
Employers will be required to provide notice describing the extension to anyone who was an Assistance Eligible Individual on or after October 31, 2009 and all individuals who have experienced a COBRA qualifying event of termination of employment (voluntary or involuntary) on or after October 31, 2009.

Additional Guidance
The Department of Labor (DOL) has until January 18, 2010 to provide additional guidance regarding this extension and associated notice requirements. Specifically, the extension includes notice requirements as well as requirements for the handling of late payments and overpayments resulting from individuals who may have already exhausted their nine-month subsidy.

State Continuation
This legislation is applicable to all other continuation programs at the state level which are comparable to COBRA. More information will be communicated as it becomes available.

We will also continue to monitor for any future legislative changes to COBRA which may occur in January as the Senate takes up debate on the “Jobs for Main Street” act (H.R. 2847), which the House of Representative passed last week.

View the Bill

I just got word of new legislation that affects Texas State Continuation of health coverage.

State Continuation is a Texas State Insurance rule that allows terminated employees to choose to keep their group health insurance for a period of time after they leave employment. It is similar to COBRA in the way it works. Most all fully insured clients that are located in Texas are subject to Texas State Continuation, even if you are not subject to COBRA laws. So if you have less than 20 employees and do not have to offer COBRA, you must still offer State Continuation.

A new Texas law enacted June 21, 2009, changes the way that State continuation works. Some of these changes we designed to help employees who have lost their jobs to keep their health coverage.

State continuation laws apply to NON-COBRA fully insured groups, including church groups, and may also apply to certain members coming off COBRA.

Here are the provisions of the new law:

I. It extends standard state continuation coverage from six months to nine months for effective dates on or after 7/1/2009

• Employer provides notice to employee upon termination
• Premium Payment due within 45 days of first day of coverage
• Premium Payment due within 30 days of due date

II. Changes to post-COBRA continuation coverage (if an employee has taken COBRA, then when that runs out they can elect to continue their coverage under Texas State Continuation):

• Employee will have 60 days to elect State continuation
• Payment due within 45 days of first day coverage
• Payments thereafter due within 30 days of due date
• Coverage remains at six months for post-COBRA (not nine months) – for example, if an employee has used up all 18 months of COBRA, they can keep their coverage for an additional 6 months under State Continuation.

III. Provides limited special enrollment period for federal premium subsidy

• Available only for employees terminated between January 1 and February 16, 2009 , (i.e. employees still
in their election period as of June 21, 2009)
• Participant had to have been within their six month continuation period
• Participant had 60 days to elect continuation
• Members eligible for the special enrollment period were notified of their right to apply for the federal
subsidy, applicable employers were also notified

For a more detailed Frequently Asked Questions, here is a handy reference site from the Texas Department of Insurance: http://www.tdi.state.tx.us/consumer/cpmrecoveryact.html

Also, as a reminder, I can help you outsource all of your COBRA & State Continuation administration!