Below you will find a listing of frequently asked questions regarding the American Recovery and Reinvestment Act (ARRA) as it pertains to COBRA. This information will help you understand the legislation and how it might affect your COBRA coverage.
- What is ARRA?
- ARRA stands for the American Recovery and Reinvestment Act of 2009. The legislation provides new rights and COBRA premium assistance for participants who were involuntarily terminated between September 1, 2008 and December 31, 2009.
- What is an AEI?
- An AEI is an Assistance Eligible Individual. An AEI is an individual who was involuntarily terminated between September 1, 2008 and December 31, 2009. Spouses and dependents of individuals can also be AEIs.
- What coverage is subject to the new law?
- All plans are subject to this new COBRA legislation (ARRA) EXCEPT Healthcare FSAs. This includes medical, prescription only, dental only, vision only, Health Reimbursement Accounts, and Employee Assistance Programs.
- When does the COBRA subsidy begin?
- The subsidy begins on or after February 17, 2009. For most current participants this will be the effective March 1st.
- What is the subsidy amount?
- If you qualify for the subsidy, you will be required to pay 35% of the monthly premium for the benefits you choose to enroll in, with the exception of any Healthcare Flexible Spending Account or life insurance plan, and the Government will pay 65% of the monthly premium.
- I’ve already paid my March 2009 COBRA premiums. Will I get a refund?
- Any credits will be applied to your future month’s premiums.
- What if I discontinue COBRA before my credit is used up?
- The remaining credit will be issued as a refund.
- Should I reduce my COBRA payments for March and April?
- No, you should continue to make your COBRA payments as billed until you complete the ARRA enrollment materials.
- What if my COBRA Qualifying Event is after March 1st?
- The subsidy is also available for individuals who have a COBRA qualifying event of involuntary termination on or after September 1, 2008 and on or before December 31, 2009. The subsidy would begin at the start of your COBRA.
- How long is the COBRA subsidy?
- The subsidy is for a maximum of 9 months.
- What if my COBRA subsidy ends before my COBRA coverage ends?
- If your subsidy ends before the end of your COBRA period, you will be able to continue coverage at the full monthly premium rate until the end of your coverage timeframe.
- Does the COBRA subsidy extend my COBRA coverage?
- The subsidy does not extend your COBRA coverage. The COBRA coverage period is determined from the start of your original COBRA coverage eligibility date.
- What is the definition of involuntary termination?
- Involuntary termination is defined as termination of employment whereby the employee did not take any action to initiate the termination. This includes layoffs, downsizing, and terminations for cause (excluding gross misconduct).
- Can my COBRA subsidy end early?
- If you fail to pay premiums or you become eligible for coverage under any other group health plan (including that of a spouse) or Medicare, your subsidy can be terminated.
- Who is eligible for the COBRA subsidy?
- COBRA eligible employees (and their dependents) who have been involuntarily terminated between September 1, 2008 and December 31, 2009.
- What if my Qualifying Event occurred on 8/31/08 and my COBRA start date was 9/1/08, am I considered an AEI?
- No, because the Qualifying Event must have occurred on or after 9/1/08.
- What if I did not elect COBRA initially?
- If you did not elect COBRA initially and you are considered an AEI, you will receive another opportunity to elect COBRA.
- What if I elected COBRA but ended early due to nonpayment of premiums?
- AEIs whose COBRA continuation has ended due to nonpayment will receive a second opportunity to re-elect COBRA coverage and take advantage of the subsidy.
- If I am an AEI who did not originally elect COBRA and I would now like to elect COBRA and take advantage of the subsidy, how does this affect my COBRA end date?
- Even though you are entitled to a “second chance” election for COBRA, your COBRA coverage timeframe is determined by your original Qualifying Event date, not when you elected COBRA.
- If I am an AEI who did not originally elect COBRA but I am now going to take advantage of the subsidy and elect COBRA, am I responsible for the past due premiums since my COBRA eligibility date?
- No, your COBRA premiums, and insurance coverage, would begin effective with the first period of coverage following the implementation of ARRA, March 1, 2009.
- If I am an AEI that has COBRA coverage ending due to nonpayment of premiums, am I responsible for past due premiums?
- No, the premiums, and insurance coverage, would end as of your last payment coverage end date.
- Are dependents of an AEI eligible for the COBRA subsidy?
- Yes, as with all COBRA elections, spouse and dependents have an independent right to elect coverage and the dependents’ coverage would also be subsidized.
- What if I think I am eligible for the COBRA subsidy but my employer has not indicated that I was involuntarily terminated?
- If your employer has determined that you were not involuntarily terminated and therefore, not eligible for the premium reduction, you can request an expedited review of your employer’s denial from the Department of Labor (DOL). The DOL will make a determination regarding the appeal within 15 business days after receiving the completed application for review. Appeals to the Department of Labor must be submitted on a U.S. Department of Labor application form, available at www.dol.gov/COBRA.
- Currently my March premium does not reflect the COBRA subsidy, why not?
- The law was signed mid-February, after the March premium statements had already been mailed. COBRA participants that qualify for the subsidy and continue to pay their pre-subsidy premium will receive a credit towards future payments.
- I’ve heard that high income individuals do not qualify for the COBRA subsidy. How will PayFlex determine this?
- High income individuals are eligible for the subsidy but if they choose to take it, they will have to pay it back with their taxes in 2010.
- What if I am a high income individual and do not want to take the COBRA subsidy?
- You will be given the opportunity to permanently waive the subsidy.
- When will the COBRA subsidy eligible participants be notified?
- Letters will be sent to all AEIs and individuals with a COBRA Qualifying Event on or after September 1, 2008. These letters will be mailed on or before April 18th.
- What if I do not turn in my COBRA subsidy paperwork in time?
- You must complete the re-enrollment materials sent to you if you intend to enroll. Failing to do so within the 60 days allotted, will be treated as a waiver of the COBRA subsidy.
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