COBRA/HIPAA Information

Consolidated Omnibus Budget Reconciliation ACT of 1985 (COBRA)

In 1985 President Ronald Reagan signed the Consolidated Omnibus Reconciliation Act now commonly known as COBRA. Among other provisions, the legislation makes it possible for qualified employees, their spouses, and dependent children to continue to be covered by their company's health insurance plan after job loss or the occurrence of a "triggering event." For a period of 18 to 36 months, the employee, spouse, or dependent child may assume responsibility for their insurance premium plus a 2% administrative fee. Normally these arrangements involve companies with 20 or more employees, but some states have created similar programs for businesses with fewer workers.

Two conditions must be met for individuals to qualify for the COBRA program. A triggering event must have occurred and that event must have caused the person to lose their health plan coverage. Employers are required by law to apprise employees, their spouses, and dependent children of their qualification to continue their health coverage under the COBRA umbrella. The eligible individual will have 60 days to elect to participate in the program or forfeit their right to do so.

Qualifying events for employees, their spouses, and dependent children include:

Continuation of coverage under COBRA is not intended to be indefinite. The original purpose of the program was to provide health care coverage until the qualified individual obtains new coverage from another source. Duration of COBRA coverage varies by circumstance. For instance the program will provide 18 months continuation for those who have lost their jobs or had their hours reduced. The maximum duration of the continuation is 36 months.

COBRA coverage will cease on:

 

Overview of COBRA changes under “stimulus law”

Several significant changes affecting most employers were made to COBRA February 17 with the signing into law of the American Recovery and Reinvestment Act of 2009 (ARRA), also known as the 2009 Economic Stimulus Plan. Employers should immediately begin planning to meet the new requirements.

In general, COBRA currently allows individuals (and their spouses and dependent children) to keep their company insurance coverage for up to 18 months after they leave their job, paying the entire premium at their former employer’s group rate. Most small and large employers are subject to the federal COBRA law or its state counterpart, mini-COBRA. The ARRA doesn’t eliminate any existing COBRA employer obligations.

WHAT’S NEW?

Effective March 1, 2009, the new law requires employers to comply with a 65% federal subsidy of COBRA health insurance premiums to involuntarily terminated employees. (The U.S. Department of Labor is working on a guideline to clearly define “involuntary termination.”)

The new law applies to both the federal COBRA law (groups of 20 or more employees) and state “mini-COBRA” laws (like Massachusetts’, which applies to groups with 2 to 19 employees). For groups subject to state mini-COBRA, insurers may be responsible for some functions.

FORMER EMPLOYEE RESPONSIBILITIES


COBRA Subsidy Extension February 1, 2010

On December 21, 2009, President Barack Obama signed the Department of Defense Appropriations Act for Fiscal Year 2010 (“DOD Act”). The new legislation includes an expansion of the federal COBRA subsidy which was established by the American Recovery and Reinvestment Act of 2009 (“ARRA”). ARRA provided a federal COBRA subsidy equal to 65% of the premium costs of COBRA for individuals involuntarily terminated on or before December 31, 2009 for a period of nine months. The new DOD Act expands the group of individuals eligible for the COBRA subsidy and the length of the subsidy has been extended. In addition, certain individuals are allowed a retroactive application of the subsidy extension and employers are subject to new notice requirements to explain the extension and expansion of the program. Further details
of the changes are outlined below.

Length of Subsidy

The DOD Act extends the nine-month ARRA subsidy term by six months, allowing individuals who qualify under the Act to pay only 35 percent of their COBRA health care premiums for a total of 15 months.

Eligible Class Expanded

The DOD Act extends eligibility to those involuntarily terminated on or before February 28, 2010.

Previous Subsidies, Credits and Retroactive Coverage

Individuals whose previous subsidies have expired now have the opportunity to have COBRA coverage at the subsidized rate for an additional six months.

To continue coverage, individuals must pay 35% of premium costs by February 17, 2010 or, if later, 30 days after notice of the extension is provided by their plan administrator.

Notice Requirements

In addition to the previous notice requirements under ARRA, employers must now provide a Premium Assistance Extension Notice according to the new deadlines under the DOD Act:

 

The Health Insurance Portability And Accountability Act (HIPAA)

The Health Insurance Portability And Accountability Act (HIPAA) offers protections for millions of American workers that improve portability and continuity of health insurance coverage.

HIPAA Protects Workers And Their Families By


Preexisting Condition Exclusions


Creditable Coverage


Certificates of Creditable Coverage


Special Enrollment Rights


Discrimination Prohibitions


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