Western Health Advantage (WHA) COBRA Subsidy Answers

WHA Statement of Position:

The American Recovery and Reinvestment Act of 2009

Federal Premium Subsidy for Eligible COBRA Beneficiaries

The American Recovery and Reinvestment Act of 2009 (ARRA) provides for a federal subsidy covering 65% of the COBRA premium for eligible individuals whose employment is involuntarily terminated between September 1, 2008 and December 31, 2009. This effectively allows a special second election offer opportunity for those eligible beneficiaries who do not have COBRA elections in effect as of February 17, 2009; the date the act was signed into law. Notices must be sent to all Assistance Eligible Individuals. The new law applies to employers covered by Federal COBRA, to those subject to state health coverage continuation laws (e.g. Cal-COBRA) and government employers.

Employers that qualify under Cal-COBRA

In order to ensure a smooth and quick implementation of these new regulations, Western Health Advantage (WHA) is prepared to completed the following tasks:

• By 4/1/09, WHA will update our standard COBRA Election forms to include the new language pertaining to the subsidy for any new termination requests received.
• By 4/15/09, WHA will mail the "special second election letters" to the reported terminations between 9/30/08 and current.
• The qualified beneficiaries (former employees and their dependents) will have 60 days to respond to the above notice. Once the notice is returned and if the beneficiary requests the subsidy, WHA will contact the Employer. The Employer is then required to provide an attestation that the employee was in fact terminated involuntarily and therefore is eligible for the subsidy. This attestation must be returned within 2 working days.
• WHA will bill the appropriate amounts to each applicable beneficiary and will be responsible for the payroll tax credit. Nothing further is needed from the Employer.
• There will be no other changes to the current administration of COBRA.
• Employers are required to submit an attestation with any eligible future termination notice. A general attestation will be available to download on our website.

Employers that qualify under Federal COBRA

Employers that qualify under Federal COBRA continue to be responsible for the full administration of COBRA including the new processes required under ARRA. WHA will continue to bill the employer or delegated entity for the 100% of the premium and it is up to the employer to pay that full amount to the health plan. We will also continue to process changes as reported.

Upon request, WHA is able to create additional billing accounts in order to separate these eligible subsidy beneficiaries.

McGrew & Maher- Going Green!

We have recently sat down and looked at the massive amounts of paper that we go through in the office and come to the decision to work at becoming a "green office". We are in the process of converting our files into "paperless files". We will also be sending our newsletters out via email instead of snail mail. This blog was also created as a way to reach all our clients without sending out letters or notifications. We are trying to figure out ways everyday to cut down on the amount of paper we use. The industry that we are in requires a let of paperwork but even some insurance carriers are now sending out some information and group agreements on a CD instead of on paper. Do you have any other ideas for us on ways to become more green?

WHA Announces "Rate Pass" for July!

Western Health Advantage is one of the most, if not the most, accommodating insurance carriers that we work with! They have been working to help businesses to keep their insurance in place. Normally, they have a January 1st and and July 1st rate increase every year. They have just announced that due to the tough economic times, they will not be having a rate increase in July! That means their rates will stay the same through 2009!

Kaiser COBRA Subsidy Answers

We have been waiting to hear from the different insurance companies as to how they will administer the COBRA and Cal-COBRA Subsidy. Following is an email from Kaiser that explains how they will handle the COBRA Subsidy. We will be posting as we hear from the different insurance companies on how they will administer the subsidy. Please call our office at (916) 781-3321 with any questions!

COBRA Subsidy Background

The American Recovery and Reinvestment Act (ARRA) created a temporary subsidy for certain individuals with either federal COBRA or state continuation coverage that is comparable to COBRA. While this law took effect February 17, the Departments of Labor (DOL), Treasury, and Health and Human Services are still working on some implementation rules and details.

Implementing this law will be complicated for our employer groups and for Kaiser Permanente. There are lots of moving parts and we still don’t have all the answers from the federal agencies. When we communicate any of this information to our brokers or our employer groups, we need to state up front that this reflects our current understanding of the COBRA subsidy requirements, but that the answers may change as the federal agencies issue further guidance and as we develop our implementation plans and discuss them with employer groups. It’s important to remember that while we want to provide our brokers and employer groups with information, we cannot provide them with legal or tax advice.

Kaiser Permanente is still developing operational plans for the new subsidy for our employer groups for whom we bill and collect federal COBRA premiums directly from members (internally called COBRA 5000 members) and for our Cal-COBRA members (called COBRA 4000 members).

For our employer groups that are subject to federal COBRA, but for whom we do not bill and collect federal COBRA premiums directly from members (COBRA 7000 members), Kaiser Permanente has very little to do in administering the subsidy. Those groups should continue to send the entire COBRA premium payment to Kaiser Permanente to maintain coverage for their federal COBRA members.

Employer groups that have questions regarding their own responsibilities under this new law, including notification requirements, should contact their legal counsel or the Department of Labor (http://www.dol.gov/ebsa/COBRA.html)

Q&A

What is the COBRA premium subsidy?
The ARRA created a temporary premium subsidy for certain individuals with COBRA or comparable state COBRA coverage (referred to as “assistance eligible individuals” or AEIs). The federal government will subsidize 65% of the portion of the COBRA or state COBRA premiums that these AEIs pay. Among other requirements, the qualifying event that made the AEI eligible for COBRA or state COBRA coverage must be the “involuntary termination” of the covered employee’s employment that occurred some time between 9/1/2008 and 12/31/2009. AEIs also must be COBRA “qualified beneficiaries,” so domestic partners cannot be AEIs.

How is Kaiser Permanente implementing the subsidy for its employer groups?
There are three tracks for how the subsidy is handled:

1.)Employer groups that bill and collect COBRA premiums from members, either directly or through a third-party administrator (TPA).
2.) Employer groups that have Kaiser Permanente handle their COBRA premium billing and collection.
3.) Groups that are not subject to COBRA but are subject to comparable state continuation coverage (Cal-COBRA).

How will the subsidy be handled for groups that bill and collect COBRA premiums from members, either directly or through a third-party administrator (TPA)?
For these groups, the employer (or the group health plan in the case of an ERISA multi-employer plan) advances the subsidy, pays Kaiser Permanente the entire COBRA premium, and gets reimbursed for the subsidy through a payroll tax credit.

How will the subsidy be handled for groups that have Kaiser Permanente handle their COBRA premium billing and collection?

For these groups, the process will be:

• The employer sends the notification of this subsidy.
• The employer determines whether applicants meet the requirements to be AEIs.
• The group notifies Kaiser Permanente when it approves an applicant to be an AEI (assuming that the AEI is enrolled in Kaiser Permanente).
• Kaiser Permanente will bill the AEI member 35% of the group’s COBRA premium (assuming that the member would otherwise pay 100% of the group’s COBRA premium).
• Once Kaiser Permanente receives the AEI member’s 35% of the group’s COBRA premium, Kaiser Permanente will bill the group for 65% of the group’s COBRA premium.
• Once both pieces of the premium are paid, the employer (or the group health plan, in the case of an ERISA multi-employer plan) can get reimbursed for their 65% portion through the payroll tax credit.

How will the subsidy be handled for groups that are not subject to COBRA but are subject to comparable state continuation coverage (Cal-COBRA)?

For these groups, the process will be:

• Kaiser Permanente will send notices about the subsidy.
• Kaiser Permanente will work with the employer groups to determine whether applicants meet the requirements to be AEIs.
• Kaiser Permanente will bill the members 35% of the group’s comparable state continuation coverage (Cal-COBRA) premium.
• Kaiser Permanente will accept these 35% payments as payments in full and will get reimbursed for the remaining 65% through the payroll tax credits.

Where can employer groups or administrators get model notices to inform people about the new election periods? The model notices are available on the Department of Labor web site: http://www.dol.gov/ebsa/COBRAmodelnotice.html

What’s the deadline for getting set up? I have heard we had to be ready March 1 or that the deadline was March 19.

March 19 was the deadline for the Department of Labor to publish the model notices. The key deadlines for employer groups and Kaiser Permanente are:

• By April 18, employers must send notices of the subsidy to people who became eligible for COBRA between September 1, 2008, and February 17, 2009.
• It is not yet clear what the deadline is for Kaiser Permanente to send notices of the subsidy to people who became eligible for comparable state continuation coverage (Cal-COBRA) between September 1, 2008, and February 17, 2009.
• By April 18, employers must send notices to any people entitled to the second chance to enroll in COBRA.
• Employers and Kaiser Permanente may require AEIs to pay 100% of the premium for March and April, 2009, as long as they refund the 65% subsidy amount to the AEIs.
• Employers and Kaiser Permanente should bill AEIs only 35% of the premium for May.

How does the subsidy work for groups that charge the additional 2% premium for COBRA? The subsidy applies to the amount of the COBRA premium that the employer charges the individual. This includes the additional 2% when the employer charges it to the individual.

For more information For more information, please visit http://www.dol.gov/ebsa/COBRA.html

Welcome To Our Blog!

Welcome and thank you for checking out our new blog! We have decided to start a blog in order to update our clients on changes, new plans, laws, etc. Please check back regularly as we will post often so that we can keep you up-to-date!