cobrabusters.com » Economic Recovery and Stimulus Act 2009

The End of COBRA Premium Subsidy Extension and Lessons Learned

cb — Wed, 02 Jun 2010 15:14:06 +0000

On Friday, June 28th, the House of Representatives approved American Jobs and Closing Tax Loopholes Act (H.R. 4213). This legislation requires 401(k) fee disclosures, provide relief for pension funds and extend unemployment benefits.

However, noticeably absent from the was a planned extension of the COBRA premium subsidy, which was omitted in order to gain enough votes for passage. The Bill passed, 215-204, before the House recessed for a one week Memorial Day Holiday.

Please note, this does not impact the COBRA Premium subsidy for individuals already receiving it who were involuntarily terminated prior to the end of May. And this does not mean that individuals who are involuntarily terminated beginning June 1 will not be eligible for a subsidy if a Senate and House Reconciliation subcomittee decide to reinsert the COBRA premium subsidy extension into the finalversion of the bill that both the Senate and House then approve.

There will likely be a Reconciliation rather than passage in the Senate of the House Bill because of the complexity and the political sensitivity of the Bill’s other provisions regarding 401K and pension regulation changes. Growing political pressure and federal deficit concerns no doubt entered into the House’s decision not to extend the COBRA premium subsidy into the bill passed last Friday.

But what this signals is the end of another automatic extension by Congress of the COBRA premium subsidy. While the COBRA subsidy has assisted hundreds of thousands of Americans, in my opinion it has been a very inefficient use of tax payer dollars.

By my calculations, had the COBRA premium subsidy legislation been designed to subsidize premiums only for those with pre-existing conditions who would have been excluded from individual plans. Those without pre-existing conditions could have purchased individual plans at premiums very near the subsidized COBRA rates.

The Feds could have achieved the umbrella protection that they intended for out of work Americans for $100 billion less, and would have enough money left over to still extend the COBRA premium subsidy through 2011 for those with pre-existing conditions. Out of work Americans would have paid the same amount for their health coverage without conditions, and taxpayers (who eventually have to repay the federal debt) would have $100 billion less burden.

Yet Another COBRA Subsidy Extension…

cb — Wed, 21 Apr 2010 20:39:17 +0000

Thursday, April 22nd, President Obama signed into law the third or fourth extension (I’ve lost count) to the COBRA Premiums Subsidy, the Continuing Extension Act of 2010 (H.R. 4851), which also extended the federal unemployment benefits and the eligibility date to the COBRA Premium Subsidy Program.

Under the signed bill, the 65% subsidy for COBRA premiums is now extended for individuals who lost their job from April 1, 2010, through May 31, 2010.

The House passed the legislation with a 289-112 vote and the Senate with a 59-38 vote.

H.R. 4851 also includes provisions that:

Extends the period that unemployed individuals may file applications for Federal Emergency Unemployment Compensation (EUC) from April 5, 2010 to June 2, 2010.
Extends from Sept. 4, 2010 to Nov. 6, 2010 the period in which individuals may claim and be paid EUC and also the period that individuals can qualify for the Federal Additional Compensation (FAC), (the extra $25 per weekly benefit amount on state and federal unemployment compensation).
Extends the period the federal government will provide 100% reimbursement for weeks of regular federal extended benefit payments from April 5, 2010 to June 2, 2010, with the state option to continue the benefit extension period from Sept. 4, 2010 to Nov. 6, 2010.

The law also directs that EUC and FAC payments be paid for general revenue, and regular employment benefits will be deducted from the EUC account, which is funded with federal unemployment taxes paid by employers.

Although this is “yeat another extension,” Congress continues to consider adopting legislation that would provide for longer extension unemployment and COBRA premium subsidy benefits. The American Workers, State, and Business Relief Act of 2010 (H.R. 4213), for instance, would extend, if passed, benefits through the end of 2010.

However, just to clarify, the new COBRA Extension Bill, H.R. 4851, DOES NOT extend the length of COBRA (18 months), nor does it extend the number of months that the 65% COBRA subsidy is available (fifteen out of the 18 months, or 9 months for TX State Continuation).

And while Democrats are hopeful of approving a permanent extension to the subsidy until the year end of 2010 vs. piecemeal extensions every six weeks, an improving economy coupled with voter concern over federal deficits may make further extensions of the COBRA Premium Subsidy more difficule to pass through Congress.

Bookmark this site for future updates on COBRA guideline changes.

Another Thirty Day COBRA Subsidy Extension Signed Into Law Helps Those Involuntarily Terminated Through End of March 2010

cb — Fri, 05 Mar 2010 20:02:36 +0000

This week President Obama signed the Temporary Extension Act of 2010, after the Senate voted to pass the measure.

The Act, generally referred to as an extension of unemployment benefits, also extends eligibility for the 65% COBRA subsidy to individuals who have involuntary terminations through March 31, 2010. Eligibility had expired for terminations after February 28, 2010. The law is retroactive, so that persons who were involuntarily terminated on March 1 and 2, are eligible for the subsidy. No other changes in the terms of the COBRA subsidy were made.

Employers and other health plan sponsors should adjust their COBRA notices to reflect the March 31, 2010 subsidy eligibility expiration date.

There is no indicationat that another extension will be approved by Congress and signed into law beyond April 1, 2010, but as of now, I wouldn’t bet against it.

Feel free to contact me if you have any questions regarding this new legislation.

Mike Chapman

214-764-6315

What Texas Businesses Must Know about the ARRA COBRA Premium Subsidy

cb — Thu, 04 Mar 2010 21:08:36 +0000

The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law on February 17, 2009 by President Obama. The ARRA allowed for a 65% government subsidy of COBRA premiums for American workers involuntarily terminated from employment. This COBRA subsidy was extended on December 19, 2009 to continue assistance for struggling American workers. Employers are required to cover the 65% of COBRA premiums up front as assistance for their former employees. The 65% of COBRA premium assistance paid by employers are refunded by the Federal government in the form of a tax credit.

How the Employer’s 65% Share of COBRA Premium Assistance Payment is Calculated
This is best explained using a simple example:
Suppose an employee has a plan that costs $100. The COBRA premium would be $102.00 (including the 2% administration fee). The ARRA reduced premium (that the employee pays) would be $35.70 ($102.00 * 35%). To calculate the employer’s 65% tax deduction, use the following formula.

Total Equivalent Premium = (Premium Received – ARRA Ineligible Premium) / .35
Employer’s 65% Reduction = (Total Equivalent Premium – Premium Received)

Total Equivalent Premium = $35.70 / .35 or $102.00.
Employer’s 65% Reduction = ($102.00 – $35.70) or $66.30

About IRS Tax Form 941 and Claiming COBRA Premium Assistance Payments
IRS tax Form 941 is for employers to file quarterly federal tax payments and is also the way for employers to be refunded their COBRA premium assistance payments. Form 941 includes lines 12a and 12b, which is where employers claim tax credits for the COBRA premium assistance payments they made on behalf of their former employees. Employers must add up all of the COBRA subsidy payments and enter that amount for line 12a and the number of individuals provided with COBRA premium assistance on line 12b.

The ARRA COBRA Premium Subsidy creates new paperwork, compliance and financial challenges to Texas Employers.

This is just one more reason for Texas Businesses to work with a third party administrator who understands the entire COBRA legislation requirements, which can change several times in a year. Given the low cost of services from third party COBRA administrators, any Texas business that attempts to self-administer COBRA with terminated employees is being short-sighted and is taking unnecessary financial and legal risks.

COBRA Subsidy Bill Expires Again; New COBRA Subsidy Bill Extension Approval Coming Soon…

cb — Wed, 03 Mar 2010 18:24:16 +0000

Congress let the Federal COBRA Subsidy expire at the end of February. New legislation to extend the subsidy retroactive to March 1st is expected to be passed and enacted into law within the next two weeks. Federal unemployment assistance also expired February 28th but an extension is expected to be included in the same legislation that will extend the COBRA subsidy.

Combined, this legislation has a price tag of $11+ billion. This will be the second time that the COBRA premium subsidy has been extended since it was originally passed in February of 2009. The “fine print” in the legislation of the expected reinstatement is not yet available, but will be posted here as soon as it is available.

Deadline nears on COBRA Premium Subsidy

cb — Fri, 26 Feb 2010 22:23:53 +0000

The extended two-month eligibility period for the premium subsidy program is set to end this Sunday, Feb. 28, 2010. This means that workers involuntarily terminated starting March 1 will not be eligible to receive the 65 percent premium reduction of COBRA or state continuation benefits.

Many believe there is Congressional support for extending the premium subsidy eligibility period again, and expect consideration of the issue in coming weeks.

My hope is that any extension will be passed before the eligibility period ends this Sunday, to avoid another retroactive benefits period. As of this morning, the House has passed a voice vote to extend the subsidy by one month. It now goes to the Senate, but isn’t expected to pass before week’s end.

Either way, I will endeavor to keep you informed as changes occur. The premium subsidy implementation workgroup will quickly evaluate any new requirements and address the operational processes necessary for compliance, should any further extension be approved.

Mike Chapman

214-764-6315

Its an early COBRABusters Christmas Gift From Congress!

cb — Tue, 22 Dec 2009 04:30:58 +0000

The US House of Representatives today passed a surprise early Christmas gift for job seekers, passing a bill extending the COBRA Subsidy eligibility period for two months, and they extended the maximum COBRA Subsidy period from from nine months to 15 months.

The new COBRA Subsidy extension was attached to the Department of Defense Appropriations Act, 2010, which very few Congressmen from either party dare vote against. The bill now goes to the Senate, which is expected to pass the Defense Appropriations bill before the end of the year.

This means that employees who are terminated through the end of February 2010 will now be leigible for the 65% COBRA subsidy, and the maximum subsidy an individual can receive is now fifteen months of COBRA subsidy instead of a maximum of nine months.

Under the current law, those involuntarily losing their jobs after the end of 2009 would no longer be eligible for the subsidy. But under the new subsidy extension provision:

The end date of eligibility for the ARRA subsidy changes from December 31, to February 28, 2010. , 2009
The ARRA premium subsidy expands to 15 months, increased from current nine months.
Those who have lost their subsidy by completing their nine months in November or later would be grandfathered in under the new legislation.
Involuntary terminations that occur on or before February 28, 2010, would be eligible for the subsidy, regardless of when the individual’s COBRA eligibility period begins. This addresses a Congressional oversight in the original bill pertaining to December 31, 2009, qualifying events.
Additional notices will be sent with information regarding the amendments to Assistance Eligible Individuals, as well as those who get terminated in January through February, 2010.

So if you are a job seeker and you’ve been stessed out about your COBRA subsidy ending, you can breathe a deep sigh of relief, and submit your check for January COBRA premium payment. Even if your insurance company makes you write the higher, unsubsidized COBRA premiums for January, you’ll get the extra payment applied towards your February premium payment, as it looks like a lock that the US Senate will pass the COBRA subsidy extension provision that is attached to the Defense Appropriation bill during the next couple of weeks, with the COBRA subsidy retroactive to December 31st.

Make sure you sign up to the COBRABusters.com newsletter at the above right to stay updated on all matters COBRA, health insurance and health care.

Wishing you and yours a happy holiday and a prosperous and employment-filled New Year in 2010.

–Mike Chapman

www.COBRABusters.com

Endeavor Group Insurance, www.EndeavorGroup.net

Group Benefits Advisors, www.GroupBenefitsAdvisors.com

214-764-6315

mtchapman@endeavorgroup.net

COBRA Subsidy Extension: Congressional Xmas Gift or Xmas Trap?

cb — Sat, 05 Dec 2009 00:11:55 +0000

Will Congress pass an early Christmas gift for the 10+ percent of the country who are presently unemployed by extending the COBRA subsidy?

While a COBRA subsidy extension remains uncertain, the healthcare Washington watchers that I follow now believe that Congress will eventually extend the law that subsidizes COBRA health care premiums for assistance-eligible employees. Will an extension be passed by Congress and signed into law by Christmas? It is still hard to predict, but if I were betting today, I’d say by Valentines Day 2010 is more likely. Afganistan and Iraq and the healthcare reform bill are getting top priority in Congress, which will likely pass a motion to recess for the holidays this coming week.

Democrats have introduced legislation outside of the health care reform bills to extend the COBRA subsidies. Current proposals include the House’s Extended COBRA Continuation Protection Act of 2009 and the Senate’s COBRA Subsidy Extension and Enhancement Act of 2009.

The House bill would provide eligible COBRA participants with an additional six months of premium subsidies.
The Senate bill includes the same measures, but would also increase the subsidy amount to 75 percent.

But no new legislation action have been taken on these measures and we’re now only three weeks ’til Christmas and Congress will be shutting down for the holidays shortly.

It is still not clear in the early stages of both the proposed House and Senate bills on this matter how any COBRA premium subsidy extension would be be made retroactive for those whose COBRA premium subsidy lapsed in November or will lapse in December or January.

For those who are sitting on the fence while waiting for a COBRA extension bill to be passed, I can only say you may be right or you may be crazy but you’re walking into a trap by subjecting yourself and your family to a lot of worry and financial risk. If your 65% COBRA subsidy has ended or is ending soon, and you are now facing paying almost three times as much for COBRA coverage as before, keep this in mind:

Any COBRA subsidy extension approved by Congress will likely be offered only to those who keep their COBRA coverage and decide to pay the higher, unsubsidized premiums. Individuals or families that let their COBRA policies lapse may not be eligible for any extension, as their policies will be considered lapsed.

I strongly urge anyone who is hoping for a COBRA subsidy extension before Christmas from Congress that you reread this entire post and consider the possible consequences of your inaction!

A wiser approach than letting your family’s health insurance lapse by not paying the unsubsidized COBRA rates would be to take a deep breath and write the now much bigger check for COBRA coverage and then write your Congressman and Senator and ask them to speed up the COBRA extension legislation. If the COBRA extension is passed and you stay on COBRA, then you’re likely to get the subsidy applied retroactive to when your extension ended, and your insurance company will then likely apply any extra premiums you paid to your next month’s premium bill.

If your financial situation is such that you cannot absolutely pay the higher premiums, then here are some of the strategies that you should check into first before you lapse your COBRA coverage due to nonpayment:

1.) Check out the Texas Chips program for covering any children in your family that are under age 19. This is a great program and very affordable coverage; you must income qualify, the only drawback is the 90 day wait period to get children approved for coverage, so don’t wait fill out an application to get them covered. For more information on the Texas Chips plan, follow this link.

2.) Ask your COBRA administrator (call the toll-free # on the back of your insurance card) how much COBRA coverage would be to cover only those family members with pre-existing conditions that would make them ineligible for an individual health plan. Then call me for advice and proposals for an individual health insurance plan for those family members who, because they have few minor or no health conditions, would qualify for an individual health insurance plan. I call this health insurance strategy “unbundling your family’s health insurance” and go into detail explaining how you can save money but still protect your family’s health in the COBRABusters.com workshops that I conduct throughout the Dallas Fort Worth metroplex.

As I attain further information on the COBRA Subsidy Act, I will post it at the COBRABusters.com website.

Just remember, if you don’t pay for your COBRA premiums because you’re hoping for a Congressional COBRA Subsidy Extension Christmas gift, you could be walking into a trap for yourself and your family.

Please forward this email message who those you know that have lost their jobs during this severe recession and may be in need of professional advice on what to do about their health insurance. I am not a pushy insurance sales type, I am an employee benefits professional who is a subject matter expert on COBRA and health insurance cost containment. Every day I offer individuals and businesses who value my expert and objective advice and counsel on insurance benefits, and it never costs anyone a penny extra to work with me vs. someone else. But there is a risk and possible cost to ignoring my advice and updates.

Feel free to subscribe above to the COBRABUSTERS.com newsletter, or call me if you need immediate assistance.

Kind regards,

Mike Chapman

TX insurance license #1235220

COBRABusters.com

Endeavor Group Insurance

6505 West Park Blvd.

Suite 306-312

Plano, TX 75093

214-764-6315

888-398-6246

Frost: Extending COBRA Subsidy Likely Rests on Health Reform Bill Passage

cb — Tue, 03 Nov 2009 22:51:49 +0000

Employee Benefits Advisor magazine’s Lydell Bridgford reports on 11/1/2009 that the likelihood of Congress extending the COBRA subsidy beyond Dec. 31st “all depends.” The link to trackback and read the full article in the Nov. 1 edition of Employee Benefits Advisor magaizne is listed below.

Individuals and families who are hoping that Congress acts in time to keep COBRA affordable may be unnecessarily putting their families at risk by not exploring other alternatives now. The typical year-end stampede for health insurance that occurs due to companies that have year end open enrollment and year-end terminations and layoffs by many firms has already begun.

Add to this the millions of indviduals and families that are at the end of their subsidized COBRA coverage. Then add to this the mass layoffs at most health insurance companies this year which that there are fewer humans who are qualified to underwrite and process health insurance applications.

What this means is that it will be harder than ever to get an individual health insurance application approved at year end. If Congress doesn’t extend the COBRA subsidy, which is anyone’s guess, then those who haven’t explored other options will likely have to pay almost three times as much for COBRA than what they have become accustomed to paying under the nine month COBRA subsidy.

So why why shouldn’t people procrastinate and just wait and hope for Congress to act? Because if Congress fails to act and does not extend the COBRA subsidy, (as if that has never happened before) there will be a tidal wave of millions of individuals and families who can’t afford COBRA unless the government pays two thirds of the cost. Then at year end, the worst possible time of the year, these people will overload the health insurance carriers’ capacity to underwrite and process applications. Which means that those same people whow can’t afford the true, full cost of COBRA coverage will not be able to get covered before their COBRA subsidy expires.

The above is not meant to be alarmist or pessimistic, it is intended to make individuals and families who are receiving the COBRA subsidy TAKE IMMEDIATE ACTION NOW, to avoid the above scenario. Explore your options and complete a health insurance application now, even if it means you cancel it and get your money back if Congress extends the subsidy, so that you can avoid the rush.

If you follow this link, you will be able to review all of the individual health insurance plans and view standard quotes from all of the “A” rated health insurance carriers in Texas. You will then be contacted by Mike Chapman within 24 hours so that he can discuss with you on a confidential basis your family’s health history so Mike can give you some additional guidance on which plan or plans provides the best level of coverage for what your family can afford, and what the final (after underwriting) rate and what, if any, policy exclusions might apply.

As opposed to other online health insurance services that collects email addresses and phone numbers in exchange for quotes and then sells that information as “sales leads” to literally hundreds of agents who will pester you for the next ninety days (if they bother to conform to No Call laws), Mike is an experienced independent broker who represents all of the major carriers for individual and group health insurance. Mike goes out of his way to explain in plain English his recommendations to his clients. You can also contact Mike Chapman at (888) 398-6246 or 214-764-6315 to discuss your own and your family’s options in confidence.

The full text of the Employee Benefits Advisor Magazine article can be read by following this link.

How & Where to Appeal if You’ve Been Turned Down for the ARRA COBRA Subsidy and State Continuation Subsidy

cb — Thu, 28 May 2009 21:12:53 +0000

The Department of Labor have created a nifty web page where individuals can appeal if they feel they have been unfairly turned down for the ARRA COBRA and State Continuation 65% premium subsidy.

You can file an online appeal directly to the Department of Labor (the fastest way), or you can fax or snail mail a written appeal if you use the DOL appeals form located here.

The above webpage also gives some great guidance to help individuals to decide whether they have the grounds to appeal a denial of the ARRA COBRA and State Continuation subsidy from a former employer.