Travis Software Official Blog

As the end of the availability of ARRA premium subsidy approaches, certain assistance eligible individuals have already or will soon be coming off of their 15-month period of federal government subsidy. Though not required under COBRA, both WebCOBRA and TravisCobra systems include an “ARRA Subsidy Termination Notice” that automatically generates thirty (30) days prior to the last day that a participant is eligible for the subsidy. In this post, you will find helpful information on administering COBRA to qualified beneficiaries who are transitioning from a subsidized coverage period to a normal COBRA coverage period.

As background, the American Reinvestment and Recovery Act of 2009 provides a COBRA premium reduction for certain eligible individuals who incurred an involuntary termination from employment between September 1, 2008 and May 31, 2010. Qualifying individuals were entitled to receive a premium reduction of 65% in their COBRA premium payments that were otherwise due to the plan for a period of up to 15 months. If COBRA coverage extended beyond a period of 15 months, then such individuals were required to pay the full amount of the COBRA premium for the remaining months of coverage.

Assistance Eligible Individuals started to exhaust their 15 month premium subsidy on or around December, 2009 (those that incurred an involuntary termination on September 1, 2008) and individuals will continue to exhaust the premium subsidy through August, 2011 (those with an involuntary termination on or around May 31, 2010).

COBRA and ARRA do not specifically require notification to a participant of the exhaustion of premium subsidy and the new full premium amount owed each month. However, it is important to keep in mind that an ERISA fiduciary must administer the plan in the best interest of the participants and beneficiaries, which includes COBRA qualified beneficiaries. Therefore, Travis created the “ARRA Subsidy Termination Notice” to print upon an individual’s exhaustion of the 65% ARRA premium subsidy that includes the effective date the subsidy will expire and provides each applicable individual with the premium amount owed upon the exhaustion of the 65% subsidy.

For additional information regarding the expiration of the COBRA Premium Subsidy, visit http://www.dol.gov/ebsa/newsroom/fsExpiringSubsidy.html. The ARRA Subsidy Termination Notice is provided below.