COBRA Payment Assistance

The following is a high-level summary of the program. This summary is not intended to be used as legal advice. Anyone with questions about legal responsibilities under the law should consult one of the government sources listed below or a legal adviser.

Eligibility

COBRA-eligible individuals who were involuntarily terminated from employment between Sept. 1, 2008, and Dec. 31, 2009.
COBRA-eligible dependents of individuals who were involuntarily terminated from employment between Sept. 1, 2008, and Dec. 31, 2009.
Individuals who were involuntarily terminated from Sept. 1, 2008, to Feb. 16, 2009, and who previously declined or elected and canceled COBRA coverage, will be given another chance to enroll.
An individual ceases to be eligible for the subsidy when the individual becomes eligible for Medicare or other group health plan coverage.
The subsidy is available only for individuals who are considered qualified beneficiaries under COBRA. Therefore, although an employer may extend COBRA eligibility to domestic partners, domestic partners would not be eligible for the federal COBRA subsidy.

Timing

In most cases, the first premium period for which the subsidy is available began on March 1, 2009.
The subsidy is generally available for up to nine months if an individual remains eligible for COBRA.
Maximum period of COBRA coverage (typically 18 months for terminations of employment) is not extended – this period generally begins as of the date an individual was terminated from group coverage.
Eligible individuals who pay the full monthly premium for their March or April coverage will be able to arrange a subsidy credit or refund with the employer.

Income

The amount of subsidy available is reduced if the adjusted gross income is between $125,000 and $145,000 or between $250,000 and $290,000 if filing jointly and a portion of the subsidy received must be repaid on the 2009 tax return.
If the adjusted gross income exceeds $145,000, or $290,000 if filing jointly, any subsidy received must be repaid as part of the 2009 tax return.

What does this mean for you?

Affected individuals

Eligible individuals are obligated to pay only 35 percent of their COBRA premium beginning with their March 1, 2009, premium payment. Most individuals whose coverage terminated on or after Sept. 1, 2008, should have received a notice regarding COBRA assistance in the mail from their former employer or plan sponsor. The notice should provide additional details on next steps.

An individual involuntarily terminated between Sept. 1, 2008, and Feb. 16, 2009, who previously declined or elected and terminated COBRA coverage, will have 60 days from the date that they receive their notice to elect subsidized COBRA coverage, effective March 1, 2009. For more information, please follow the links at the bottom of this page to government Web sites. If you have questions, please call your former employer.

Employers

Eligible individuals are obligated to pay only 35 percent of their premiums starting with the period of coverage beginning March 1, 2009. You will be reimbursed the subsidized amount, 65 percent, by the government. Please review this helpful IRS question and answer Web page regarding reimbursement. Employers were responsible for notifying affected individuals as required by law no later than April 18, 2009, and for paying 100 percent of all COBRA premiums to the insurer. Check the information below regarding model notices provided by the government. Employers may continue to use the Providence COBRA election form available on our Web site. Employers offering COBRA do not need to provide a copy of the Request for Treatment as an Eligible Individual Form (subsidy request form). Employers offering state continuation coverage need to provide the request form to Providence Health Plan.

In addition, the subsidy law permits employers, at their discretion, to allow subsidy-eligible employees to switch to a lower or equal cost plan option to make COBRA more affordable. When employers offer more than one Providence Health Plan option to a class of employees, an employee in that class may switch to a lower cost plan if desired. If employers offer this option, then they must also communicate that fact to affected individuals.

Producers

When communicating with employers, please discuss the fact that eligible individuals are only obligated to pay 35 percent of their premiums starting with the period of coverage beginning March 1, 2009. Also, it is important to alert them to the employers' responsibility of notifying affected individuals and paying 100 percent of all COBRA premiums to the insurer.

Regarding individual communication, please inform individuals that their former employer will provide them with a notice with additional information regarding next steps. Refer them to their former employers with questions.

Producers also may direct employers and individuals to the Department of Labor, Internal Revenue Service and the Oregon Insurance Division's Web sites for more information. Links to these Web sites are highlighted below.

Model notices for COBRA employers

The Federal Department of Labor (DOL) published model notices for employers' convenience. The DOL has provided the following guidance regarding the notices:

The general notice is to be sent to all qualified beneficiaries, whether they are currently enrolled in COBRA coverage or not, who have a qualifying event during the period from Sept. 1, 2008, through Dec. 31, 2009. This notice may be provided separately or with the employer's standard COBRA election notice that follows a COBRA qualifying event. An abbreviated general notice is also available to be used in lieu of the general notice when the recipient is currently enrolled in COBRA.

The notice in connection with extended election periods is intended to be sent to any individual who meets the above eligibility criteria, who had a qualifying event at any time from Sept. 1, 2008, through Feb. 16, 2009, and who either did not elect COBRA continuation coverage or who elected but subsequently discontinued COBRA. This notice must be provided within 60 days following Feb. 17, 2009.

Additional resources

For more information please research the following Web sites: