COBRA Changes to TravisCobra and WebCOBRA for the Stimulus Package
Posted on February 17th, 2009 by Alan Williams | 56 comments »
Category: 2009 Stimulus
Topics: stimulus
Category: 2009 Stimulus
Topics: stimulus
Now that the American Recovery and Reinvestment Act of 2009 (the ARRA, or the Economic Stimulus bill) is law, we thought you would like a summary of the general changes being made to TravisCobra and WebCOBRA.com and when we’re going to have those changes to you.
First, the timing. Since the 65% subsidy to eligible Qualified Beneficiaries starts as early as March 1, 2009, that date forms the date which we are targeting for having your new versions of TravisCobra sent to you, and for having the new release of WebCOBRA.com implemented. We actually began development of the changes to our systems in mid-January, after the Cobra changes first appeared in the stimulus bill proposed in the House of Representatives.
Travis has a great deal of experience sending notification letters, and in calculating, billing and reporting subsidized COBRA premiums. We’re putting that to work with the ARRA changes.
ARRA-related changes we are adding to the systems
- We’re adding the subsidy calculation of 65%. It appears that there is no “look back” on the subsidy – it starts March 1st for those who are eligible now and starts as of the loss of coverage date for new QBs, and lasts for up to 9 months. New premium coupons and notices will print for all eligible QBs once you indicate in their QB record that they are eligible for the subsidy.
- We are adding a report that you will be able to print for each client or employer that will summarize the premium subsidies attributable to premiums paid in a certain month. Your clients can use that report to know what payroll tax credits they should take against their 941 taxes so that they can recapture the subsidy.
- There is a re-notification requirement in the law, allowing those QBs who were involuntarily terminated on or after September 1, 2008 and did not enroll in COBRA previously to make a new decision about enrollment based on the new information about the subsidy’s being available. The Secretary of Labor has thirty days to issue a model notice for the re-notification letter designed to go to those who had qualifying COBRA events on or after September 1, 2008, but there is no guarantee that the Secretary will meet that deadline. Since letters need to be sent to those QBs to let them start their new 60-day enrollment period based on the subsidy, we are including a new Notification Letter and Re-Enrollment Form in our new releases. They will print for each QB whose qualifying event date was between 9/1/08 and the date of printing of the new letter, will disclose that the QBs need to have been involuntarily terminated in order to be eligible for the subsidy, and will also disclose that the QBs must have annual incomes of less than $125,000 for single filers and $250,000 for joint filers in order to qualify for the subsidy. Of course, you will be able to edit the wording of the letter and enrollment form we add.
- The letter is also going to have a disclaimer that while the QB can apply for the subsidized benefits based on their belief that they were involuntarily terminated, they understand that the IRS will reclaim the subsidy from the QB if they accept the subsidy and it later turns out their income was higher than the threshold levels.
- TravisCobra and WebCOBRA.com will add a ”check-box” to the QB’s record denoted as “Involuntarily Terminated and Eligible for Subsidy.” That box can be manually entered for existing QBs, and may be either entered or downloaded for new QBs. It will trigger the generation of the letter with disclosure wording about the possible eligibility for the 65% subsidy.
What administrators need to be doing now in order to help meet the new COBRA requirements
- Because we are going to print a letter to each QB already entered into the system with an Event Code of “Terminated” since 9/1/08, you don’t have to query your clients about which of their terminated QBs since 9/1/08 were voluntary and which were involuntary. Once a QB indicates by returning his re-enrollment form that he/she is interested in enrolling at the subsidized rates, though, you will need to get confirmation at that time from your employer that the QB is telling the truth about their involuntary termination. Once you receive that confirmation, you can process their enrollment at the subsidized premiums.
- For new QBs you should begin having your client include information about the nature of any QB’s termination (voluntary/involuntary) so that you will know whether or not to check the “65% Subsidy” box and trigger the printing of the appropriate letter.
- You may want to let your client know that you will be furnishing them with a report of the subsidies they can deduct from their 941 tax deposits, so that they have the comfort of knowing that they will be given an accounting of those subsidies.
- We will keep you informed of additional changes to the systems as we make them. We are certain to be making additional changes to TravisCobra and WebCOBRA.com as more information about the COBRA changes becomes available, and as more guidance becomes available from DOL and IRS.
56 Responses to “COBRA Changes to TravisCobra and WebCOBRA for the Stimulus Package”
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February 18th, 2009 at 07:46 AM
My employer offered a buyout program with final decisions in on March 20, 2009; if I take this, my family would be on COBRA insurance. Does the 65/35 COBRA payments pertain to my situation?
February 18th, 2009 at 08:07 AM
Question, With new QB’s that I will be entering as of today, should I included the 65% or proceed as normal until March 1
February 18th, 2009 at 09:37 AM
My husband’s employer went out of business. His date of termination was December 31, 2008. Insurance was paid up until 1/31/09. After that we were offered to elect for COBRA. Since my husband’s employer is no longer in business they will not be able to pay future payroll taxes. Are we still eligible for the 65% reduction?
February 18th, 2009 at 10:14 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 11:05 AM
For the subsidy reports, can you please, please include a department field on them? We are a PEO and only have one “client” set up on webCOBRA, but have many departments as our clients. We need to separate the subsidies by client so we need departments to do that. Thank you.
February 18th, 2009 at 11:09 AM
Add the qualifying event description and number to the employer notification #2 report We need a report to determine who was a voluntary verses involuntary termination from 9/1/2008 to current. The company HR may also need to review a report.
February 18th, 2009 at 11:31 AM
Hi, I’m a third-party COBRA administrator and am getting a lot of calls with questions pertaining to this bill. I have a couple of questions that need clarification:
1. Am I understanding correctly that for current COBRA Participants, the subsidies begin 3/1/09 and are not retroactive, even if they have a termination date on or after 9/1/08?
2. Do the people who have not elected and have term dates after 9/1/08 have their subsidies start 3/1/09 as well, or do they start on their date of termination?
February 18th, 2009 at 11:34 AM
I’m going to chime in with Rose. We load all 2% admin fee in the rates so our processor are quoting the correct rates right from the rate table. How will the new process account for the 2% in the rates already?
February 18th, 2009 at 01:30 PM
I have worked for one company for 40 years, retired and had to go back to work full time to obtain benefits again, I am 62 years old and it is too difficult to obtain insurance. I would like to at least be able to cobra until I get on medicare as there is NO other alternative. Is this possible, and I will pay the entire amount and not expect to be subsidised. I thought 55 and older would be in the new provisions
February 18th, 2009 at 01:32 PM
@Michael: that depends on if your buyout is considered voluntary; it needs to be involuntary to be eligible
@Cathy: continue processing as normal, the system will take care of the 65% once it has been updated
@Christine: difficult to say, but if COBRA is being offered, then that organization would be paying payroll taxes, or getting a check from the government
@Rose and @Sharon: we discourage adding the admin fee into the base rate for problems on reports and now the government subsidy. I think you’re going to run into problems because of this practice.
@Leslie: We will provide a way for you to list out the listing of QB/PQBs who have enrolled in the government subsidy, but it won’t be based on the description
@Matt: You are correct, not retroactive. on #2, they would start as of 3/1
February 18th, 2009 at 01:46 PM
If I understand correctly the new law only applies to medical and not to vision and dental? If so, will Travis be able to separate billing & subsidy?
February 18th, 2009 at 01:53 PM
Two Questions: 1.) I see on line 3 of the COBRA changes for TravisCobra (above) states that the law does not require to re-notify those terminated as of 09/01/09. I understand that the bill signed does state that we have 30 days to get out the re-notification letters. Please clarify? 2.) Will we, COBRA Administrators have to mandate who is eligible for the subsidy? In other words, if they are voluntarily or involuntarily terminated or if they are high income? What if we are given incorrect information and our client just assumed they are voluntarily terminated and are not in the high income? Who does the liability fall on?
February 18th, 2009 at 01:56 PM
Unlike Rose, we do not add the 2% in the premium. There is no clear answer on the 2% admin fee? What happens to it? Does the COBRA administrator lose the fee or do we charge the 2% within the 35% premium and then the client takes it as a deduction on their payroll taxes?
February 18th, 2009 at 02:07 PM
Also, the wording on one of the previous blogs has me concerned:
“Event dates are between 9/1/2008 and the passage of the Act.”
What happens to the people that are terminated between 2/17/09, when the Act passed, and 3/1/09, when the subsidies go into effect?
And, if their coverage begins on 3/1/09, does their COBRA expire 18 months from 3/1/09, or is it 18 months from their original termination date?
February 18th, 2009 at 03:27 PM
@Elizabeth: I’m not sure where you need clarification… you have 60 days to notify eligible participants of their right to enroll in COBRA as of 3/1 at the newer/lower rates.
@Elizabeth: Without further guidance, we feel in a $1000 premium, the admin fee will still be $20, and the government subsidy will be $650.
@Matt: Those people will get the 65% rate starting on 3/1… all QBs, regardless of re-enrollment have their 18 months starting as of the event date.
February 18th, 2009 at 04:10 PM
I am a 59 year old divorced woman on Cobra. Because my husband became disabled we went on Cobra in Feb 2006. Due to a later divorce, I was eligible for a total of 36 months on Cobra. My coverage is ending on Feb. 28, 2009. Being over 55, and self employed, recently turned down for an individual policy, could I qualify for Cobra until age 65?
February 18th, 2009 at 06:50 PM
@Shary: In my opinion no… the provision to extend COBRA for 55+ or long term workers was removed in the Senate bill and did not make it into law.
February 18th, 2009 at 07:49 PM
Jesse, Thanks for the update. Yes, it looks like sadly that is the case. I guess I will go “Commando”. (Without health insurance). :) It is a brave new world!
February 19th, 2009 at 07:31 AM
Jesse, Thanks for all of your input. As I stated in another blog we first stated using Travis before 1991 and there was not other place to put the 2% admin. fee. This is why we add it to the premium. Isn’t Travis doing anything to help this situation? Please advise, and help.
Thank you,
February 19th, 2009 at 08:31 AM
We have a group that had a layoff in August and their ee’s insurance ended 8/31/08 but their actual termination dates were in August. Will those ee’s be eligible for the special enrollment period?
February 19th, 2009 at 09:41 AM
If a QB termed on 9/15/2008 then enrolled in COBRA for Oct and then termed for lack of payment in November, will they be eligbile to reenroll into COBRA on 3/1/2009 at the reduced rates?
February 19th, 2009 at 10:26 AM
Do the new laws only apply to groups 20 or more? Do you know if State continuation laws will be mirroring the Federal laws? I administer many small groups (under 20) that are pummeling me with questions.
February 19th, 2009 at 10:43 AM
If an employee was involuntarily terminated on or after 09/01/08, elected COBRA and later terminated for non-payment, does the new election/enrollment period apply? For example, involuntary termination with qualifying event date of 09/15/08, COBRA starts 10/01/08. Participant elects COBRA within the 60 days and pays for 2 months. Participant terminates for non-payment 12/01/08. Will this person be extended the right to “reactivate” COBRA coverage or does the re-enrollment only apply to those who declined COBRA coverage within their initial 60-day period?
February 19th, 2009 at 10:56 AM
Who is responsible for the notification if you were not the client’s Cobra administrator on 9-1-2008?
February 19th, 2009 at 11:36 AM
@Rose: Based on some new guidance, we think it won’t matter if you have the admin fee included or not. New post coming soon about admin fee / existing subsidies and the 65% premium reduction
@Adella: No, since they already exercised their right to enroll in COBRA; you’re only eligible for enrollment under the re-notification if you did not enroll in COBRA
@Julie: In my opinion, these changes only affect COBRA, so under 20 groups are still unaffected
@Melissa: see answer to Adella above
@Janet: I haven’t seen any guidance on that, so the answer is up in the air. You may want to play it safe though, and if you are the administrator now for the group, notify them since you would be the administrator as of 3/1/09
February 19th, 2009 at 11:50 AM
In listening to the Department of Labor speak on the stimulus plan, Adella’s answer is not correct. Even if they elected and then lost the coverage due to nonpayment of premium they are offered the second chance to enroll. Also, it is our understanding that the 2% admin fee is included. Is Travis currently going down the path to modify or use an insert for the notification? Is Travis working on an attestation form for the pqb? Will we still be able to display both the full premium and then the subsidized premium amount on the enrollment forms and premium computation forms?
Thanks!
February 19th, 2009 at 12:39 PM
@Karen please see the implementation details for TravisCobra and WebCOBRA (recently posted)
February 19th, 2009 at 02:42 PM
Please define involuntary termination thanks
February 19th, 2009 at 04:17 PM
I am a COBRA administrator, and I deal with a client who regularly offers COBRA Severance at 100% for a predetermined amount of time for the terminated employee. I understand the QB will qualify for the 35% subsidy after the severance, but how does the EMPLOYER subsidy work? Do they still claim the 65% on the 941 for the time during the severance, and then contniue to claim the subsidy until the end of the 9 month time, or do they have to wait until the severance is over to claim the 65% on the 941?
February 19th, 2009 at 05:40 PM
We have a group that had a layoff in August and their ee’s insurance ended 8/31/08 but their actual termination dates were in August. Will those ee’s be eligible for the special enrollment period?
February 20th, 2009 at 08:10 AM
RE:Clients that teminated business with our TPA after 9/1/08 but before 3/1/09. Before the new notificatons run, it would be our responsibility to notify them? Just activate them, run the letters and shut them off again? Or is Travis going to be able to pick up all terms 9/1/08 and forward?
February 20th, 2009 at 10:34 AM
@Kim: the law, as written, does not define Involuntary Termination, so you’ll have to be reasonable in your application of it
@Lisa: Here’s just my opinion… During the time of the 100% employer subsidy, the QB is required to pay $0. During March 2009 through November 2009, the government will pay 65% of the total due to the QB. Since 65% * 0 is $0.00, there would be no claim against 941.
@Kim: there’s nothing set about that period of time. We’ve said it might be smart for administrators on the other end of the equation (those administering as of 3/1/09) for them to notify the QB. I can’t give any guidance on your part…
Anyone else have suggestions for Kim?
February 20th, 2009 at 10:43 AM
I have a quick question. It is my understanding that those who have initially declined COBRA, who have been dropped from coverage because of a failure to pay the required premium, or are still in the enrollment period as of the date of enactment are entitled to this Special COBRA Election Period. Here’s the scenario:
A member terminated October 31, 2008. They had until February 12, 2009 to enroll into COBRA. They failed to do so and a Travis Non-Commencement letter went out on the same date. However, on February 20, 2009, we received a check from the former member for all past premiums due. They were never dropped from coverage because of a failure to pay the premium, nor did they decline the coverage (as witnessed by the sending in of the check). In addition, they are no longer in the enrollment period as of the time of the act. Because they were late, the check will be sent back, however, would they still be entitled to the subsidy under the Act?
As a follow up, does this mean that all those who do not send in their initial payment/enrollment in a timely fashion, would receive a second chance at picking up COBRA?
Please advise.
February 20th, 2009 at 10:46 AM
Those who were involunarily terminated after 9/1 and enrolled in COBRA when first eligible – are they eligible for a reduction as of 3/1?
February 20th, 2009 at 10:53 AM
As a follow up to my question #33, would the answer change if the Travis non-commencement letter was NOT sent?
February 20th, 2009 at 11:28 AM
Alan Williams, president of Travis Software, states in his informational piece above all the questions; “For new QBs you should begin having your client include information about the nature of any QBs termination (voluntary/involuntary) so that you will know whether or not to click the “65% subsidy” box and trigger the appropriate letter.” Wouldn’t it be easier if Travis Software built a new qualifying event code “Involuntary Termination/Stimulus” that would automatically generate the 65% subsidy and would also automatically generate the correct letter set? That way the information is transmitted by the client during entry and does not require an administrator to monitor all client activity every day, contact the multiple clients everyday and ask the multiple clients which of their entries are voluntary and which are involuntary. I’m not sure what he means by “having the client include information about the nature of any QBs termination…” ??? Where does the client provide this information? When? To whom? For those of us who administer multiple clients this would be a very onerous burden. Seems much simpler to me to have Travis Software add a new QE code.
February 20th, 2009 at 11:36 AM
@Helen: Originally we thought no, but after guidance from the IRS, we’re going with yes. You, naturally, can interpret however you like.
@AWilliams (from the trade union): Generally speaking, if the event was involuntary termination after 9/1/2008, the QBs have the right to re-enroll as of 3/1/2009. They would, most likely, be eligible for the subsidy, but no coverage would be offered between 10/31/2008 and 3/1/2009.
February 20th, 2009 at 11:41 AM
@Lisa – You will be able to set that a QB has the 65% subsidy during the QB Add Wizard, if you know the event was involuntary. The section you’re describing talks about existing records in the system that have to be re-notified (and for whom you do not know if the events were involuntary). If you do do if they were voluntary or not, you can simply go to each existing record and enable the ARRA subsidy.
February 20th, 2009 at 11:46 AM
What about someone who was laid off on Aug 31, 2008 and started COBRA on Sept 1, 2008? Will they get the subsidy? Seems to be yes, but we’re not sure.
February 20th, 2009 at 12:47 PM
A follow up to my question #34 – if those already enrolled in COBRA (and involuntarily terminated 9/1 or after) are entitled to a reduction 03/01 – how will that information be provided to them? Will they have to “re-enroll”?
February 20th, 2009 at 01:26 PM
@Alfred: You may seek counsel’s advice on that. Seems that their coverage most likely stopped at 11:59:59PM on 8/31/2008, so I’m not sure how you could view the event as a 9/1/2008 event. Interesting case thought!
@Helen: You’ll be able to send enrolled QBs the ARRA Enrollment Form for them to return (asking them to verify the involuntary termination and income levels to enroll in the ARRA Subsidy.
February 20th, 2009 at 03:19 PM
If a dependent loses eligibility due to divorce is that dependent eligible for the subsidy?
February 21st, 2009 at 12:30 PM
Voluntary vs. Involuntary….. there needs to be an exact definition/description. I administer COBRA for several clients and many have brought up these questions: a.) If employee takes family medical leave (FMLA) and chooses not to return is this considered quitting and voluntary? b.) If someone is terminated due to employee’s lack of skills, or not doing an adequate job is this involuntary because they are being fired? c.) If an employee is retiring but does not qualify for retiree benefits (or employer does not offer retiree benefits) is this an involuntary termination as well because employee chose to leave job and retire? Please help we do need a detailed description on what constitutes an involuntary termination. Thanks!
February 21st, 2009 at 12:35 PM
My COBRA paperwork says my election date is March 1, 2009. I have neither accepted or declined coverage as of yet. Can I just wait for my re-enrollment paperwork, elect coverage starting March 1 and forego coverage/premiums for January & February 2009?
February 21st, 2009 at 01:10 PM
I keep reading from a United Health Care article that a participant has 90 days of receipt of the COBRA election notice to choose a new plan option that must be the same or lower premiums and must be available to non-COBRA active employees under the plan. Would this be like processing a new Enrollment along with an Open Enrollment period? Will the letters that go out list all the plans that are available for each client? I’m not clear on this point!
February 21st, 2009 at 01:23 PM
Well, I am confused. I was on an FLMA because of a relapse of Multiple Sclerosis. In August, the plant where I worked, shut it’s operations down. We were given 60 days of pay and insurance coverage before i started paying COBRA. So, now the way I understand this new law, is that there will be no one from this plant of over 1000 employees, eligible for the COBRA assistance?
February 21st, 2009 at 02:27 PM
@Adella: in my opinion, possibly… all depends on if the original event was involuntary termination. I’d seek advice of counsel on that
@Elizabeth: So this is only my opinion, but I’d go with a: seems voluntary and not eligible, b: seems involuntary and eligible, c: voluntary and not eligible
@Elizabeth: I would consider it like an open enrollment period. Both systems will produce a letter that you can modify. You are correct though, must be lower premiums than the QB was under at the time of the event.
@Rob: The qualifying event seems to be in August with a 60 day subsidy from the employer. I can’t say for certain, but it would appear, in my opinion, to be ineligible because the event was not on/after 9/1/2008. I encourage you to let the white house know your store: http://www.whitehouse.gov/the_press_office/arra_public_review/
February 23rd, 2009 at 12:50 PM
Hello, I just wondered if i would be eligible for the help from the stimulas. I am going to retire a little early in May, as my husband had cancer and a stroke, and I will be able to go on medicare in January.
February 23rd, 2009 at 02:55 PM
Jesse, all of this information is very useful. Our company pays for coverage at 100% through severance for a QB’s from 9/1/08 through 5/1/09. When does the 9 months begin? From 3/1/09 even though the employer is paying or from 5/1/09? Thanks in advance.
February 23rd, 2009 at 03:09 PM
@Elisa: we can’t say for certain, but it does not appear to be an involuntary event, nor a COBRA event since you’ll be eligible for medicare
@Rose: Thank you very much!!! the 9 months begins 3/1/2009, and if the employer pays a 100% subsidy the government severance won’t take effect until the end of the 100% subsidy
February 23rd, 2009 at 05:15 PM
I understand you reccomend a mass mailing to all QB’s with qe dates of 9/1/08-2/17/09. Will this mass mailing cover both notice requirements? In other words, will this notice and enrollment form allow currently enrolled QB’s to “accept” the subsidy beginning 3/1/09 or will it only cover those who might want to “re-enroll” begining 3/1 ?
Thanks Jesse
February 24th, 2009 at 08:28 AM
@Chuck: Yes, currently enrolled QBs will receive the ARRA Enrollment form, and non-enrolled will receive the full ARRA Enrollment packet (notice, enrollment form, premium computation form).
February 24th, 2009 at 09:50 AM
When can we expect the updated version of Travis to be delivered?
February 24th, 2009 at 10:34 AM
@Kendra: We expect to ship (via FTP) TravisCobra this Friday, February 27, and install WebCOBRA over the weekend.
February 24th, 2009 at 01:41 PM
We have received guidance that the re-notification needs to be sent to ALL participants regardless of the QE. (Reference #3 of your publishing) Can you please direct me to the specific language in the act so that we might take it to legal?
February 24th, 2009 at 02:05 PM
@Sebrina: Section 3001.a.C.3 (page 401) defines the Assistance Eligible Individual. Sub-paragraph C says the event “consists of the involuntary termination of the covered employee’s employment” Then 3001.a.C.4 defines the extension of election period, states the individual must be an Assistance Eligible Individual
Hope that helps!