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The Stimulus Bill provisions that took effect on February 17, 2009 require special COBRA treatment for "assistance eligible individuals." See "Stimulus Bill COBRA Amendments Require Immediate Group Health Plan Action" for more information.
The Stimulus Bill definition of "assistance eligible individual" generally includes any COBRA "qualified beneficiary" who meets all of the following requirements:
Is eligible for COBRA continuation coverage at any time during the period beginning September 1, 2008 and ending December 31, 2009;
Elects COBRA coverage (when first offered or during the additional election period): and has a qualifying event for COBRA coverage that is the employee's involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.
This definitions includes both involuntarily terminated employees and their dependents who lost coverage under a group health plan due to the involuntary termination. Presently, no additional guidance exists regarding this definition.
As part of their COBRA amendments, the Stimulus Bill limits the COBRA premium that a COBRA-covered group health plan can charge an "assistance eligible individual" to 35% of the otherwise applicable COBRA premium for a period of up to 9 months (the "Subsidy Period") beginning March 1, 2009. Employers sponsoring these group health plans must pay the remaining 65% of the COBRA premium (the "COBRA Subsidy") for the assistance eligible individual during the Subsidy Period. However, the Stimulus Bill allows an employer to seek reimbursement by claiming a payroll tax credit for these COBRA Subsidy payments by complying with applicable IRS procedures.
The Stimulus Bill also requires certain assistance eligible individuals whose employment terminated between September 1, 2008 and February 16, 2009 and did not elect COBRA coverage when previously offered or who allowed COBRA coverage to lapse after electing that coverage be offered a second COBRA enrollment period in which to elect prospectively to enroll in COBRA coverage. It also requires that group health plans that offer employees different plan options allow assistance eligible individuals the option to change their coverage choice. Also Group health plan administrators must provide certain notifications to assistance eligible individuals concerning these changes.-
Cynthia M. Stamer March 4, 2009, HR Resource
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