COBRA Compliance under the new Stimulus Act (ARRA) and PA State Mini-COBRA

1. COBRA Compliance under the new Stimulus Act (ARRA) andPA State Mini-COBRA HRS/TND Associates, Inc. Thomas N. Dondore, SPHR Research by: Sean Glasser, HRS COBRA Administrator HRS/TND Associates, Inc.

2. What is the subsidy… • Extension of election period for AEI’s • Obligation to inform of alternate coverages • 35/65 split of cost of COBRA PREMIUM • Government repayment of 65% of COBRA premium HRS/TND Associates, Inc.

3. COBRA and Subsidy • COBRA = Event plus Loss of Coverage 20+ EEs • Non-subsidy eligible: • Voluntary termination of employment, retirement, reduction of work hours (18 months); Loss of dependent status, divorce, Medicare entitlement, death of employee (36 months) • Medical, Dental, Vision, EAP’s, HRA’s and FSA’s • Subsidy eligible: • Involuntary termination or layoff (18 months with 9 subsidized) • COBRA eligibility must begin by December 31, 2009 (9 months eligibility can continue into 2010) • Must make less than $145K ($290K joint) annually • Cannot be eligible for other health care – exceptions • Medical, Dental, Vision, EAP’s, and HRA’s (FSA’s not eligible) • DOL, IRS and HHS all share COBRA responsibilities HRS/TND Associates, Inc.

4. Eligible?What about… • Offered and accepted early out? • Quit in anticipation of discharge? • Constructively discharged? • Terminated due to “gross misconduct”? HRS/TND Associates, Inc.

5. Documentation required • But not submitted • Accounting of receipt of COBRA payments • Copy of insurer’s invoice (fully insured) • Proof of premium payment and coverage • Attestation of involuntary termination • Proof of AEI’s eligibility for premium • SSN’s of all eligible employees covered by subsidy, amount of each subsidy, and whether for 1 or 2 or more HRS/TND Associates, Inc.

6. End of subsidy notice End of Subsidy Notice • Notifies AEI that they have reached the end of their 9-month subsidy eligibility • Offers them right to continue under COBRA at full premium rate HRS/TND Associates, Inc.

7. Potential Issues • Handling employer paying part or all of COBRA premiums • Collection of administrative fee • AEI not reporting loss of eligibility status • “Fronting” significant dollars HRS/TND Associates, Inc.

8. Potential Issues • Right to Appeal to DOL – maximum 15 day decision cycle • De novo case only • By statute, Appeal Court must defer to the ALJ HRS/TND Associates, Inc.

9. Potential Pitfalls • Notice requirements and timelines are strict and penalties are severe ($110/day) • About the money: Who tracks receipt of COBRA premiums? Who handles the 65/35 subsidy split? How do you get your part? • How do you handle COBRA participant who becomes disabled? • What is the right definition of involuntary termination for subsidy eligibility? • How do I learn about options to offer a cheaper plan? HRS/TND Associates, Inc.

10. PA Mini-COBRA and Subsidy • Non-subsidy eligible: • Voluntary termination of employment, retirement, reduction of work hours, loss of dependent status, divorce, Medicare entitlement, death of employee (9 months) • Medical and HRA’s only • Subsidy eligible: • Involuntary termination or layoff (9 months, all subsidized) • Eligibility began July 10, 2009 • New timelines, new stipulations HRS/TND Associates, Inc.

11. PA Mini-COBRAFacts • Unlike most Minis in other states, employer is mostly responsible, not carrier • Carriers had to notify all covered individuals that mini-COBRA exists- employer now has all responsibility • ??? Notification of future hires • Medical plans only, no vision, dental, etc. • Enforcement by PA Department of Labor, HHS, USDOL, IRS HRS/TND Associates, Inc.