[Fredslist] New Bill passed, COBRA Stimulus Bill!!! - United Benefit Consulting/HUB Monthly Benefit Tip

[Susan Sajiun]

> Hello fellow Gothamites! 
> 
> As you may know, UBC/HUB distributes email blast twice a month to our
> clients and prospects to ensure that they remain current on important
> legislation. Below you will find the most recent Email Blast that was
> distributed to our clients and prospects. The blast discusses the
> newly implemented COBRA Stimulus and how it will impact employers as
> well as employees. 
> 
> We are receiving new information on the COBRA Stimulus Bill everyday
> and I will update you as we put together additional data! 
> 
> In summary, On February 17, 2009, President Obama signed into law H.R.
> 1, the American Recovery and Reinvestment Act of 2009 (ARRA) that
> included a provision allowing certain Qualified COBRA beneficiaries to
> pay only 35% of the required COBRA premium for a maximum of 9 months,
> with the remaining 65% to be paid by the employer.  Employers will be
> able to deduct the 65% of the premium they subsidized for the employee
> with a credit on their payroll tax payments. 
> 
> Individuals who have been involuntarily terminated between September
> 1, 2008 and December 31, 2009 and who have annual incomes of less than
> $125,000 (single) or $250,000 (joint filers) for the taxable year in
> which the subsidy is received (i.e., either 2009 or 2010) are eligible
> for the COBRA premium assistance, along with their families. For group
> health plans using calendar months as the period of coverage, the
> subsidy applies beginning March 1, 2009.
> 
> Please see the below notice for additional important information
> regarding the changes in COBRA legislation and the compliance actions
> needed right now.
> 
Susan Sajiun-Fitzharris 
Susan Sajiun-Fitzharris, CFP 
Vice President - Employee Benefits 
United Benefit Consulting Inc. 
A Division of HUB International 
susan.sajiun at hubinternational.com 
Phone: 631-780-3333 ext. 306 
Fax: 917-934-5318 




> United Benefit Consulting 
> 
> A Division of HUB International  
> 
> Announcement
> 
> Press Release 
> 
> 	
> On February 17, 2009, President Obama signed into law H.R. 1, the
> American Recovery and Reinvestment Act of 2009 (ARRA).  Among many
> other provisions designed to encourage economic recovery, Title III of
> ARRA expands the federal Consolidated Omnibus Budget Reconciliation
> Act (COBRA) Continuation Coverage to provide a 65 percent federal
> subsidy toward an eligible worker's COBRA premium for up to 9 months.
> The provisions in ARRA providing this subsidy are effective as of the
> date of the President's signing.  A brief summary of the newly enacted
> COBRA subsidy follows.
>  
> What Is The COBRA Subsidy?
>  
> Eligible workers will receive a 65 percent subsidy toward their COBRA
> continuation premium for up to 9 months.  The Treasury Department will
> administer the subsidy, providing employers or health plans, if they
> administer COBRA benefits, with a credit against payroll taxes for the
> cost of the subsidy.  The subsidy would terminate the date the
> individual becomes eligible for any new employer-sponsored health care
> coverage or Medicare coverage. 
>  
> For What Coverage Is The Subsidy Available?
>  
> The federal subsidy is available for COBRA continuation coverage and
> for state programs providing comparable continuation coverage.  The
> subsidy is not available for coverage under a health flexible spending
> arrangement.
>  
> Who Is Eligible For The COBRA Subsidy?
>  
> Individuals who have been involuntarily terminated from employment
> between September 1, 2008 and December 31, 2009 and who have annual
> incomes of less than $125,000 (single) or $250,000 (joint filers) for
> the taxable year in which the subsidy is received (i.e., either 2009
> or 2010) are eligible for the COBRA premium assistance, along with
> their families.  If the premium subsidy is provided to an individual
> whose income exceeds $145,000 (single) or $290,000 (joint), then the
> amount of the premium subsidy for all months during the taxable year
> must be repaid.  For taxpayers with income between $125,000 and
> $145,000 (or $250,000 and $290,000 for joint filers), the amount of
> the premium subsidy for the taxable year that must be repaid is
> reduced proportionately.
>  
> Do Any Special Enrollment Rights Exist?
>  
> Qualified individuals who initially decline COBRA coverage prior to
> the enactment of ARRA would be given an additional 60 days after they
> receive notice of the special election period to elect to receive the
> subsidy.  The election period begins on the date of the enactment of
> ARRA.  The special election opportunity is also available to a
> qualified beneficiary who elected COBRA coverage but who is no longer
> enrolled on the date of enactment, for example, because the
> beneficiary was unable to continue paying the premium.  
>  
> Federal COBRA law provides that a group health plan must allow an
> eligible individual to choose to continue with the coverage in which
> the individual is enrolled as of the qualifying event.  However, ARRA
> allows group health plans to provide a special enrollment right to
> allow eligible individuals to elect different coverage under the plan
> in electing COBRA continuation coverage.    Further, even though the
> premium subsidy is only for 9 months, the different coverage elected
> must generally be permitted to be continued for the applicable
> required period (generally 18 months or 36 months, absent a COBRA
> terminating event).
>  
> What Are The Notice Requirements? 
>  
> COBRA notices must include information on the availability of the
> premium assistance and must be provided to all individuals who
> terminated employment during the applicable time period, not just to
> individuals who were involuntarily terminated.  The Department of
> Labor has 30 days after the enactment of ARRA to issue model notices. 
>  
> How Is The Subsidy Administered?
>  
> The subsidy is generally administered as a reimbursement.  The entity
> to which premiums are payable will be reimbursed by the amount of the
> premium for COBRA coverage that is not paid by an eligible individual
> on account of their 65 percent premium reduction.  An entity is not
> eligible for subsidy reimbursement, however, until it has received the
> reduced premium payment from the eligible individual.  The entity to
> whom the federal reimbursement is payable is either (1) the
> multiemployer group health plan, (2) the employer maintaining the
> group health plan subject to federal COBRA, or (3) the insurer
> providing coverage under an insured plan.  
>  
> The entity that is eligible for reimbursement may elect to offset its
> payroll taxes for purposes of reimbursement.  To the extent that such
> entity has liability for income tax withholding from wages or FICA
> taxes with respect to its employees, the entity is reimbursed by
> treating the amount that is reimbursable to the entity as a credit
> against its liability for these payroll taxes.  That is, the credit
> for the reimbursement is treated as a payment of payroll taxes.  Any
> reimbursement for an amount in excess of the payroll taxes owed is
> treated in the same manner as a tax refund.  Entities wishing to claim
> reimbursements will be required to file certain reports, including an
> attestation of the involuntary termination of employment of each
> covered employee for which reimbursement of premiums is claimed.
>  
> What Is The Effective Date Of The COBRA Subsidy?
>  
> These provisions are effective for periods of coverage beginning after
> the date of the enactment of ARRA.  For group health plans using
> calendar months as the period of coverage, the subsidy applies
> beginning March 1, 2009.  Additionally, eligible individuals who pay
> 100 percent of the premium required for COBRA for any month during the
> first 60-day coverage period after enactment will be reimbursed.
>  
> Is The Subsidy Retroactive?
>  
> Although the subsidy is available to employees who were terminated
> starting September 1, 2008, the subsidy itself is not retroactive.  It
> will apply only to periods of coverage beginning on or after March 1,
> 2009.
>  
> What Compliance Actions Should Be Taken Now?
>  
> At a minimum, the following compliance actions should be undertaken as
> soon as possible:
>  
> * Review records to identify employees who were involuntarily
> terminated from     employment since September 1, 2008;
> * Update COBRA materials to comply with the new requirements;
> * Determine whether to permit individuals to elect a different health
> plan option when electing COBRA coverage;
> * Review severance policies to revisit the issue of any employer COBRA
> premium contributions;
> * Notify the appropriate individuals of their new rights and
> responsibilities under    ARRA;
> * Develop processes and procedures for the administration of the COBRA
> subsidy; and
> * Keep informed about the status of the soon to be released model
> forms and regulations.
>  
> For general information regarding COBRA, see:
> http://rs6.net/tn.jsp?et=1102465564663&e=0010b0F2OoOH8-Hg4dsARUCAN9Fl9
> PbkbimW37l1Iab3NpkJFtV49warzPUZqWgFLgUijADwEaQZ4sMKi3AsewfnAJyaO0GXpi5
> Ur8EY6VU3ATfO7yGaLS95STCgAWAC3pguHbB6gPLm-bmwk4DUN1OYZsj3VBdESsS
> 
>  
> Susan Sajiun-Fitzharris, CFP 
> 
> Vice President - Employee Benefits 
> 
> United Benefit Consulting, 
> 
> A Division of HUB International.com
> 
> 631-780-3333
> 
> susan.sajiun at hubinternational.com  
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