Economic Stimulus Passed by Congress - COBRA Changes
Posted on February 14th, 2009 by Travis.Development | 17 comments »
Category: 2009 Stimulus
Topics: stimulus
Category: 2009 Stimulus
Topics: stimulus
Both houses of Congress passed the American Recovery and Reinvestment Act of 2009 on Friday. The Senate agreed to the conference report 60-34, and now goes to the President’s desk for him to sign into law.
What changes do we see for COBRA Administrators?
You can view our list of COBRA implications and there were plenty of questions and answers on our original coverage of the COBRA stimulus changes
On Monday, we’ll post an outline of the changes we’ll make to WebCOBRA and TravisCobra to help you:- Re-notify former employees eligible for the new enrollment period
- Verify whether terminations were ‘involuntary’ or not
- Reduce premiums by 65% from March through December 2009
- Use premium reductions in employer’s payroll taxes
- Notify all COBRA participants of ability to change plan enrollment for 90 days
17 Responses to “Economic Stimulus Passed by Congress - COBRA Changes”
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February 16th, 2009 at 02:20 PM
The final joint resolution stated 60% subsidy for 9 months. Will your updates reflect that percentage?
How is the 2% being treated by WEBCOBRA? We are assuming that it will be part of the participant’s 40% charge (42%) for those employers choosing to charge the admin fee, because it is not referenced within the text of the bill.
What model language is being proposed? We have not seen model language produced by the DOL at this time. Thank you.
February 16th, 2009 at 02:41 PM
@Daisy the final percentage was actually 65% in congress – Section 3001.a.1.a
We’re in the same mind as you regarding the admin fee. In a hypothetical $100 premium with a 2% admin fee, the QB would pay $37 and receive a $65 government subsidy (premium reduction).
For model language, we’ll have something by the end of this week, and when the DOL/IRS issues guidance we’ll update then (supposedly 30 days from signing)
February 16th, 2009 at 02:59 PM
When will Cobra discount take affect. I called up mu provider for Cobra-they said June. I believe it should be sooner than that. I cannot pay the premiums until June. I have back-up insurance at 550 a month. Cobra would be cheaper. If I do not remain with Cobra will I be able to get back in? Thanks, Mike.
February 16th, 2009 at 03:47 PM
Would it be easier to administer this if a general notice went out to everyone termed 9/1/08 and forward, with information that if they were terminated due to loss of coverage/lay off…that they may be eligigle fo a new 60day enrollment period… and have an enrollment form for them to sign up? Then the administraor can check to see if they are eligible for the 65% reduced COBRA rate for 9 months. As it stands now, we would have to pull the paper terms for over 5000 people to see if they were a voluntary term or involuntary and in some cases we may have to contact employers for that information.
February 16th, 2009 at 04:00 PM
What happens when the employer pays their 65% of the premium and the employee doesn’t pay their share? Can coverage be terminated?
February 16th, 2009 at 04:20 PM
@Kim… That’s exactly our current plan… we’ll auto-populate a new event with a 3/1/09 start date for all terminations after 9-1-2008 (who did not enroll in COBRA). The notice will specify the requirements such as ‘involuntary terminations’. When the QB enrolls the Administrator can then verify involuntary termination.
@Michael I can’t really say when you’re provider will start to take advantage of the government subsidies. We see in the law a start of March 2009 however
@Carolyn… The government subsidy only gets used when the QB pays their 35% share. So if the QB doesn’t pay, there is no coverage and they’ll either non-commence or be terminated (same as current COBRA coverage).
February 17th, 2009 at 11:01 AM
My husband was recently given notice that his position will be eliminated. He was given 90 days to find other employment. We currently have a group plan from his employment, however, they do not contribute anything for our insurance. I am 62, semi retired, on Social Security, and my husband will be 60 in June. The current job market offers mostly 1099 and not W 2 postions so we would be on our own for inusrance again. Would we qualify for the extension of Cobra to 18 months?
February 17th, 2009 at 03:20 PM
@Marie: it’s hard to say for certain, but it appears you will be offered COBRA as of your husband’s event date in approximately 90 days. You will also most likely receive the 65% government subsidy, but that depends on a number of factors. COBRA doesn’t get extended though – it just is 18 moths in a normal termination.
February 17th, 2009 at 06:40 PM
From EarlEaston@yahoo.comxxxx (remove xxxx):
Did the final version eliminate the 55 year and older provision? Is therefore COBRA still limited to eighteen months?
February 17th, 2009 at 09:16 PM
@Earl: yes, the Senate’s version didn’t have that, and it was dropped in the final version.
February 18th, 2009 at 10:42 AM
We currently add our 2% to the COBRA rate, and enter this into TravisCOBRA. How is Travis handling calculating the 35%? It is my under standing that the 35% is on premium and not the 2% admin. fee the QB’s still have to pay that at 100%. Thank you
February 18th, 2009 at 01:34 PM
@Rose: we discourage this practice because of this type of scenario. I anticipate you will have problems due to not setting the admin fee up correctly.
February 18th, 2009 at 02:41 PM
Jesse, when we first started TravisCOBFRA in 1991 the only way to incorporate the 2% onto the rate was to add it in. There wasn’t a separate way to break it out. Please advise.
February 18th, 2009 at 03:28 PM
@Rose: one possibility would be to create separate plans for eligible QBs that have the rate correctly broken out into 2% admin fee and regular premium.
February 19th, 2009 at 07:40 AM
Our company is self-insured and we determine our own rates. We are unsure if we will have to follow these guidelines concerning the 65% reduction.
February 19th, 2009 at 10:33 AM
1 concern i have…,in order to please our clinets, we have been using the event code 09 “loss of coverage” and have added “layoff” in the decsription, if Travis is only going to go back and capture the event code “terminated” how do we pick up those who we termed under event code 09?
February 20th, 2009 at 11:45 AM
@Sandi: I would recommend speaking with an ERISA attorney regarding that; it’s above my paygrade
@Kim: The ARRA Stimulus Wizard described here will pick up custom events if you want.