Multiple news outlets are reporting that the COBRA subsidy program instituted during the ARRA legislation of 2009 will not be continued.  The US Congress recently moved to strip out a measure which would have extended the program beyond June 1st of this year.

President Obama signed HR 4851 into law on April 15 extending the eligibility date for treatment as an AEI under the ARRA to all Qualifying Events occurring on or before May 31, 2010.  The applicable portion of the Act is the following:

SEC. 3. EXTENSION AND IMPROVEMENT OF PREMIUM ASSISTANCE FOR COBRA BENEFITS.

(a) Extension of Eligibility Period- Subsection (a)(3)(A) of section 3001 of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), as amended by section 3(a) of the Temporary Extension Act of 2010 (Public Law 111-144), is amended by striking `March 31, 2010' and inserting `May 31, 2010'.

(b) Rules Relating to 2010 Extension- Subsection (a) of section 3001 of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), as amended by section 3(b) of the Temporary Extension Act of 2010 (Public Law 111-144), is amended by adding at the end the following:
`(18) RULES RELATED TO APRIL AND MAY 2010 EXTENSION- In the case of an individual who, with regard to coverage described in paragraph (10)(B), experiences a qualifying event related to a termination of employment on or after April 1, 2010 and prior to the date of the enactment of this paragraph, rules similar to those in paragraphs (4)(A) and (7)(C) shall apply with respect to all continuation coverage, including State continuation coverage programs.'.

(c) Effective Date- The amendments made by this section shall take effect as if included in the provisions of section 3001 of division B of the American Recovery and Reinvestment Act of 2009.

The Senate is expected to vote later today to proceed with H.R. 4851, the “Continuing Extension Act of 2010,” which would extend the end date of eligibility for COBRA premium reduction under the ARRA to April 30, 2010.  The exact language from the Bill is as follows:

SEC. 3. EXTENSION AND IMPROVEMENT OF PREMIUM ASSISTANCE FOR COBRA BENEFITS.
Subsection (a)(3)(A) of section 3001 of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), as amended by section 3(a) of the Temporary Extension Act of 2010 (Public Law 111-144), is amended by striking `March 31, 2010' and inserting `April 30, 2010'.

From the Employer’s Council on Flexible Compensation (http://www.ecfc.org) on December 16, 2009:

The House will consider the COBRA subsidy expansion as part of the House Amendment to the Senate Amendment to H.R. 3326 – Department of Defense Appropriations Act, 2010. The text can be found as Section 1010 starting on page 153.  To go there now Click Here

If enacted in its current form, the provision would:

A) Change the end date of eligibility for the ARRA subsidy from December 31, 2009 to February 28, 2010;

B) Expand the ARRA premium subsidy to 15 months (increased from current 9 months);

C) Allow a period for the retroactive payment of premiums for assistance eligible individuals (i.e., individuals who were entitled to the subsidy) whose subsidy period expired on November 30th and who failed to pay their premium for December coverage. The retroactive period is 60 days, commencing with the enactment of the provision or, if later, 30 days after provision of the Notice described in d below. The same refund/credit rules under the original bill apply to any AEI whose subsidy expired in November and who have since paid the full COBRA premium.

D) Require a special Notice to all assistance eligible individuals who are on COBRA on or after November 1st or whose qualifying event is a termination of employment occurring on or after November 1st, describing the new 15 month premium subsidy. Note: Going forward most administrators will incorporate this additional notice in their standard COBRA package; and

E) Address an issue with regard to the original subsidy (i.e., both the qualifying event and the 18 month COBRA period must commence prior to the original sunset date of December 31st) by conditioning eligibility for the COBRA subsidy only on a qualifying event that is the involuntary termination of employment occurring on or before the new February 28, 2010 sunset date, without regard to when the COBRA coverage period begins. Thus, for employers providing subsidized coverage that defers the COBRA start date, the 15 month period (which is applicable only to the COBRA period) may not commence until well into the future.

The US Department of Labor this morning posted an updated FAQ regarding the end of the ARRA COBRA Subsidy.  The updated FAQ clarifies that if a Qualified Beneficiary experiences a COBRA Qualifying Event on or prior to December 31, 2009, but the QB’s First Day of COBRA coverage is on or after January 1, 2010, that the QB is not eligible for treatment as an Assistance Eligible Individual.  The link to the updated FAQ is here http://www.dol.gov/ebsa/faqs/faq-cobra-arra.html.

Senators Sherrod Brown, D-OH, and Bob Casey, D-PA, have introduced Senate bill S. 2730.  Details of the bill including the full text can be found here.  Among other things, the bill would extend the ARRA COBRA Subsidy from 9 months to 15 months, extend the end date for eligibility for treatment as an AEI to June 30, 2010, and increase the Subsidy amount from 65% to 75%.  All of these would be effective retroactive to the enactment date of the ARRA.

From Kilpatrick Stockton in Washington, DC.

Congress has been working on COBRA subsidy expansion bills.  Two separate bills have now been introduced, one which is more expansive than the other.  The smaller of the two bills is HR 3966, which would only extend the ARRA subsidy for involuntary terminations and loss of coverage occurring through June 30, 2010. 

However, the larger bill is HR 3930, and includes the following provisions –

·        Qualifying events with the 18-month COBRA period would be extended to 24 months for any termination of employment (voluntary or involuntary) or reduction of hours that occurred during the 21-month period starting on April 1, 2008, and ending on December 31, 2009.  Further, if an individual's COBRA coverage already expired before the law is passed, affected qualified beneficiaries would have a second election right to obtain the additional six months of coverage.

·        The ARRA subsidy would be extended for involuntary terminations and loss of coverage occurring through June 30, 2010.  Further, all ARRA subsidies would continue for up to 15 months (current 9 months plus an additional 6 months under the proposal), but all subsidies would end by December 31, 2010 regardless of the new 15-month rule. 

Currently, both bills have not made it to the House floor yet, and no similar legislation has been introduced yet in the Senate. 

USA Today has put COBRA in the news this week, with an article on the effects of the stimulus bill subsidy on a soaring COBRA population.

http://www.usatoday.com/money/industries/health/2009-08-17-unemployed-insurance-cobra_N.htm

Spend a few quick minutes on Google, and you’ll find that just about everyone in history has made a quote about opportunity knocking or the perils of waiting for your ship to come in.  It is kind of like watching American Idol with my kids each week – I begin to long for someone to do something different – something unique.  On the other hand, perhaps the message in the monotony is that simple truths are simply true.

The American Recovery and Reinvestment Act of 2009 has swamped our industry for the last two months, and more than any other event in the long history of COBRA, it is separating the wheat from the chaff, the professionals from the amateurs, you get the point.  Opportunity is knocking.

Two of our customers report closing more new business between February 17, 2009 and April 1, 2009 than in all of 2008.  Another customer reported to me in late March that they had closed new business in this timeframe which will increase their COBRA population by 33%.  A third customer had one of their competitors reach out to inquire whether our customer would absorb their 450 COBRA clients because the current COBRA administrator was convinced they would fail in trying to comply with the ARRA on time. 

More than ever, employers are looking for professional benefits administrators who have the systems, processes, and people in place to respond rapidly and professionally to change.  Do not doubt that more change is coming, and employers know it.  Now is the time for COBRA administrators to call every employer they know.  Opportunity isn’t just out there…it is knocking loudly.

InsureBlog takes COBRA and ARRA in the spotlight this week with an informative article:

http://insureblog.blogspot.com/2009/04/cobra-arra-gotcha.html