WageWorks COBRA Bulletin #10

Important ARRA Update

Recent questions have prompted us to provide a reminder that November 2009 is the first month that the ARRA subsidy will terminate for any active COBRA participant who elected COBRA and was deemed eligible for the 65% employer subsidy as of March 1, 2009.   Although Congress is proposing an extension WageWorks wanted to be sure that at this time no extension has been approved.

In addition, IRS COBRA Notice 2009-27 indicates that both the involuntary termination and eligibility for COBRA continuation coverage must occur between 9/1/08 and 12/31/09 for an individual to be eligible to be covered as an Assistance Eligible Individual (AEI).   Under the current statute, if a loss of coverage takes place after 12/31/09, the individual cannot be covered as an AEI and will not be eligible to receive the 65% COBRA premium assistance subsidy.

Proposed extension of ARRA

Congress has introduced a number of bills that could extend the original ARRA subsidy for qualified individuals under COBRA.  While there are varied approaches, here are some of the potential changes:

• Extend eligibility for the ARRA subsidy through June 30, 2010
• Qualifying Events with 18 months of COBRA may be extended to 24 months for termination, involuntary termination and reduction in hours, for events beginning April 1, 2008 through December 31, 2009
• Individuals whose coverage may already have expired may be provided an opportunity to re-enroll for an additional six months
• The ARRA subsidy would be extended from 9 to 15 months through June 30, 2010
• The Senate bill would increase the amount of the premium subsidy from 65% to 75%

The Senate bill would also extend the subsidy to those whose hours were reduced to the point that they were no longer eligible for coverage

None of the bills have passed yet; however, we do anticipate that some level of extended ARRA subsidy coverage may be approved.
The House Bill H.R. 3962, for Health Care Reform, which did pass on 11/7/09, did extend the length of time anyone on COBRA continuation can be covered until the “Exchanges” are available, which is expected in 2013. Again, while this bill has passed in the House, it is not yet law.
We will keep you all informed, in an effort to be prepared to handle any and all changes that take place, when the final legislation is passed.

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