Compliance Update | COBRA and CHIPRA
03/17/2010
Please be advised of the following updates to COBRA and CHIPRA which require action on your part. I. COBRA Premium Subsidy Extended President Obama recently signed into law the Temporary Extension Act of 2010 (H.R.4691) which includes a provision to temporarily extend the COBRA premium subsidy program. Under this Act the 15-month COBRA premium subsidy program is extended to include employees who experience an involuntary termination of employment between March 1 – 31, 2010. In addition, The Act expands eligibility for the COBRA premium subsidy to individuals terminated between March 1 - 31, 2010 and who as a result of a previous reduction in work hours as far back as September 2008, experienced a COBRA event but declined to elect coverage. Employers are now obligated to notify these newly terminated employees of their opportunity to elect coverage and receive the premium subsidy. The subsidy is available from the period following the enactment of The Act on March 2, 2010, through the end of their COBRA period. Any gap in coverage between the first qualifying event and the current termination of employment will be disregarded as it pertains to a pre-existing condition; also payments for the “gap” period would not be required. The new law does not change the length of the maximum COBRA coverage period and commencement of the 18 months of COBRA eligibility is from the earlier reduction in work hours event. The Senate is currently considering HR 4213, the “American Workers, State, and Business Relief Act,” which would include extending the premium subsidy to employees laid off through December 31, 2010. We will update you on any further development relative to this initiative. The Department of Defense Appropriations Act passed last December extended the subsidy’s eligibility period under ARRA for two months to February 28, and extended the maximum duration of the federal assistance from nine months to 15 months. New model COBRA notices are attached for your convenience and can also be found on the following site: http://www.dol.gov/ebsa/COBRAmodelnotice.html. II. CHIP Model Notices Available for Distribution In our most recent compliance update we provided information regarding The Children’s Health Insurance Program Reauthorization Act of 2009, (CHIPRA). At the time however, the Model Notices provided by the Department of Labor were not available. These notices are now available and are attached for your use. These notices can also be found at the DOL website: http://www.dol.gov/ebsa/pdf/chipmodelnotice.pdf. Employers, who maintain a group health plan in one of the 40 states that provides medical assistance under a state Medicaid plan, in the form of premium assistance, are required to annually notify employees of the potential opportunity to receive premium assistance to purchase group coverage. The most current listing of the 40 eligible states is provided in the Model Notices. These notices must be provided to all employees, regardless of whether the employee is enrolled in the employer’s health plan and regardless of the employer’s principal place of business. The Employer CHIP Notice must be distributed in accordance with the following schedule: - For plan years beginning January 1, 2010 – February 4, 2010 the Notice must be provided on the first day of the 2011 plan year.
- For plan years beginning from February 5, 2010 – April 30, 2010, the Notice must be provided by May 1, 2010.
- For plan years beginning on or after May 1, 2010, the Notice must be provided by the first day of the plan year.
Employers may choose to include the Employer CHIP Notice as part of the annual open enrollment materials, providing the stated date(s) above are met and that the Employer CHIP Notice is prominently presented. As always, should you have any follow up questions please feel free to contact your Yozell Account Manager.
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