For HR professionals, all the discussion threads about COBRA probably make you wish that the golf company by the same name was simply unveiling a new, state-of-the-art line of rescue woods. Alas, not so (well, maybe Cobra is doing something like that, but that's not the point of this entry).
The economic stimulus package known as the American Recovery and Reinvestment Act of 2009 ("ARRA") brings much hope with it that jobs will be stabilized and the economy rejuvenated. For those of you in HR, it would appear that you have yet another layer of job security. The ARRA means changes to our methodologies if we want to avail ourselves of the carrots dangling from the sticks. When those methods are "adjusted," it almost always means a wave of new rules for HR professionals and the laws within which they work.
COBRA is significantly impacted by the ARRA:
1. A COBRA subsidy is now available, where the government provides 65% for continuation coverage premiums for up to 9 months (in your best commercial narrator voice: certain exclusions may apply).
2. But we know that "free" money from the government isn't really free, right? Correct! (in your best Alex Trebec impersonation). The subsidy actually comes from the employer's pocket, to be paid upfront. The employer then is allowed to deduct the 65% figure from the Social Security and Medicare taxes paid.
3. Pull out those personnel records, because the COBRA subsidy is backdated to September 1, 2008. That means that you should quickly refresh your memory on who has experienced a COBRA-qualifying event from September 1, 2008 and. . . .
4. Letters/notices should be sent to those who qualify for the subsidy. Your plan administrator should handle this step for you, but you should get in touch with said administrator to ensure that nothing is needed from you, especially if you have changed insurance carriers since September 1, 2008.
5. While you're furiously scribbling down notes on the ARRA, jot down this action item: amend group health plan documents to show that the ARRA COBRA changes have been adopted and incorporated.
6. Remember that "some exclusions may apply" caveat? One exclusion is for health care flexible spending accounts--those are not eligible for the subsidy.
7. The retroactive nature of the ARRA does not mean that subsidies will reach back that far. Rather, those who fall within this time frame are to be given another opportunity elect COBRA. The subsidy will become effective on the first COBRA continuation period after the enactment of the ARRA. For most of you, that would mean March 1, 2009.
You should work with your plan administrator to identify those individuals who may be eligible for the subsidy payment and calculate the premium payment now required under ARRA.
Isn't it nice to be needed?