HR XCEL News

The recently passed Stimulus Act includes sweeping changes to Cobra benefit coverage and administration.  HR XCEL has been monitoring these developments over the past month in order to keep our clients informed and make them aware of the potential impact these changes may have on their organizations.

Subsidy – Eligible workers will receive a 65 percent subsidy toward their health care coverage premium for up to 9 months. The Treasury Department will administer the subsidy and provide employers a credit against payroll taxes for the cost of the subsidy. The subsidy would terminate upon the offer of any new employer-sponsored health care coverage or Medicare eligibility. The Cobra subsidy is excluded from taxable income except for recapture provisions for highly compensated workers - (adjusted gross income in excess of $125,000 (single) or $250,000 (couples).

Employee Eligibility – Individuals who have been involuntarily terminated between September 1, 2008 and December 31, 2009 with annual incomes less than $125,000 (single) or $250,000 (couples) are eligible for the COBRA premium assistance, along with their family. Qualified individuals, who initially declined COBRA coverage, would be given an additional 60 days after they receive notice of the special election periodto elect to receive the subsidy. The election period begins on the date of enactment of the Stimulus Act.

Special Enrollment – The bill allows group health plans to provide a special enrollment window for a 90-day period following notification, to allow eligible individuals to elect different coverage under the plan. This enrollment window does not apply to Dental, Vision, or Counseling/Referral benefits.

Notice Requirements – COBRA notices must include information on the availability of the premium assistance and we expect model notices from the Department of Labor 30 days after enactment. Eligible participants must receive notification within 60-days of the bill's enactment.

Effective Date – These provisions are effective for premiums the first calendar month following the date of enactment.