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Employer Cobra Update by Vickie Grinder


Employers recently received notification for COBRA changes which took effect January 1, 2010. H.R. 3326 was signed December 21st, 2009 by President Obama extending the expansion of the COBRA subsidy for health care. In March 2009 we updated you on employer obligations for COBRA under the American Recovery and Reinvestment Act (ARRA) where the federal government “subsidizes” the COBRA premiums. Well, not really. As you may recall the employer and terminated employee must advance the cost of the premium. Breakdown: employer=65% and terminated employee=35% for a period of nine months. The employer bears the brunt of the policy premium and must “request” reimbursement from the federal government through a 941 payroll tax credit. The terminated employee had to meet the following criteria:

  • You must have been involuntarily terminated from employment between September 1, 2008 and February 28, 2010.
  • You must be eligible for COBRA benefits - if you were terminated for gross misconduct, for example, you are ineligible for COBRA.
  • Even if you were previously eligible for COBRA benefits but you rejected those benefits, you may still be eligible for the new benefit. You have 60 days from receipt of notice from your employer to elect COBRA coverage.
  • The benefit phases out for individuals whose gross income exceeds $125,000, and for those who file joint returns if their income exceeds $250,000.

H.R. 3326 was amended on December 19, 2009, applies to periods of health coverage COBRA that began on or after February 17, 2009 and lasts for up to fifteen months versus the original nine month bill. No business which offers health insurance is exempt from H.R. 3326. The details are listed on page sixty four of the bill. FYI, according to COBRA rules you may qualify for coverage if your employer’s group health insurance plan covers twenty or more employees. But what about small businesses which employees nineteen or less? A Mini-Cobra which all but eleven state participates in.  Maryland is a Mini-Cobra state and has increased the time frame in conjunction with the federal COBRA extension of fifteen months as well. Just a note, as of July 2009 Pennsylvania’s Mini-Cobra became effective which small business do not need to “front” the premium assistance payment because Pennsylvania’s Mini-COBRA law places the obligation on the insurer.

COBRA  (Consolidated Omnibus Budget Reconciliation Act) is a government initiative added onto a number of federal Acts, including the Employee Retirement Income Security Act and the Public Health Service Act. For more information Maryland State Insurance Department Contact Information: Maryland Insurance Administration Attn: Office of Public Affairs
525 St. Paul Place - Baltimore, MD 21202-2272 http://www.mdinsurance.state.md.us/

 

(References: Powers Insurance Agency, Thurmont, MD,  Cobra Health Insurance Resource Maryland and

H.R. 3326)