COBRA Payment Assistance

The following is a high-level summary of the program. This summary is not intended to be used as legal advice. If you have questions about your legal rights or responsibilities under the law, you 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 May 31, 2010.
COBRA-eligible dependents of individuals who were involuntarily terminated from employment between Sept. 1, 2008, and May 31, 2010.
Employees who lost coverage due to a reduction in hours between Sept. 1, 2008, and May 31, 2010, and were subsequently involuntarily terminated March 2 through May 31, 2010, have a new opportunity to enroll for subsidized coverage.
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

The subsidy is generally available for up to 15 months if an individual remains eligible for COBRA.
Maximum period of COBRA coverage (typically 18 months for terminations of employment) is not extended by the subsidy – this period generally begins as of the date an individual was terminated from group coverage.
Note that for individuals who enroll after an involuntary termination that followed a reduction in hours, the maximum duration of coverage is calculated as if the reduction in hours was the qualifying event for coverage. Affected individuals are not required to pay retroactively. Subsidized coverage begins on the first of the month following the involuntary termination of employment.

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 applicable 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 applicable tax return.

What does this mean for you?

Affected individuals

Eligible individuals are obligated to pay only 35 percent of their COBRA premium payment. COBRA election notices should include information about how to enroll in COBRA and request the subsidy. Individuals whose coverage terminates should receive a notice regarding COBRA assistance in the mail from the employer or plan sponsor. The notice should provide additional details on next steps.

For more information, please follow the links at the bottom of this page to government Web sites. If you have questions, please call the employer.

Employers

Eligible individuals are obligated to pay only 35 percent of their premiums. You will be reimbursed the subsidized amount, 65 percent, by the government. Please review this helpful IRS question and answer Web page regarding reimbursement. COBRA election notices should be updated to reflect the recent extension. Employees who lost coverage due to a reduction in hours between Sept. 1, 2008, and May 31, 2010, and were subsequently involuntarily terminated on or after March 2, 2010, should be included in the COBRA election notifications – see the Department of Labor Web site below for the model new election period notice to be sent to these individuals. (In such cases, this will be the second notice that individuals receive.) In addition, Employers are responsible for paying 100 percent of all COBRA premiums to the insurer.

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. 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 member communication, please inform individuals that the employer must provide the notices described above with additional information regarding next steps. Refer them to the employer 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 published updated 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 who have a qualifying event during the period from Sept. 1, 2008, through May 31, 2010. This notice may be provided separately or with the employer's standard COBRA election notice that follows a COBRA qualifying event.

In additional to the general notice, a separate notice may be required for certain individuals as outlined on the DOL Web site.

The Department of Labor's Employee Benefits Security Administration COBRA page now has available model notices updated for the extension provisions. They are available at http://www.dol.gov/ebsa/COBRAmodelnotice.html.

Additional resources

For more information please research the following Web sites:

Providence Health Plans