COBRA

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

The COBRA Subsidy Extension: A Brief Explanation.
Cowart, Greta E.; BNA's Pension & Benefits Reporter; v37 p 34 Jan 5, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Department of Defense Appropriations Act of 2010 included an amendment that extends the COBRA subsidy to allow 15 months of benefits. Those involuntarily terminated from work between September 1, 2008 and February 28, 2010, are eligible. The change requires employers to revise notices to employees. It also requires informing those eligible for assistance who stopped paying COBRA premiums before December 21, 2009, that they can be reinstated by retroactively paying the premiums. Employers should establish procedures for identifying affected employees, providing notice of the extension, calculating premiums and handling payments.
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COBRA and the Stimulus Act: A Sign of Things to Come?
Muldowney, Patrick M.; Compensation and Benefits Review; v42 no1 pp 24-29 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : One provision of the American Recovery and Reinvestment Act of 2009 (ARRA) requires employers to subsidize COBRA premiums for involuntarily terminated employees. The requirement is only for employees and beneficiaries of employees terminated between August 31, 2008 and January 1, 2010, and employers must pay at least 65 percent of COBRA premiums for nine months. Employers can recover the subsidy as a payroll tax reduction if they follow certain reporting requirements. Individuals who experienced a qualifying event and who were not provided with an ARRA election notice must receive a general notice on COBRA rights, including a description of the premium subsidy and forms for determining eligibility.
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Election Changes for FSA Plans.
LeTourneau, Janet; Broker World; v30 no1 pp 70-71, 73 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Changes may be made to existing flexible spending account (FSA) elections when a change in status, cost or coverage occurs and the election change satisfies the consistency rule. The consistency rule, applying to each participant separately, essentially states that the change in election must correspond with a change in status that affects that plan year's eligibility under the employer's plan. There is an exception in cases where the participant becomes eligible for COBRA under the employer's group health insurance plan.
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COBRA Handbook.
Golub, I. M.; Chevlowe, Roberta K.; 555 pp; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Offers a nontechnical explanation of COBRA continuation coverage, including advice on plan design and administration, model COBRA notices and other sample language. Contains the full text of the DOL and IRS final COBRA regulations.
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Mandated Benefits: 2010 Compliance Guide.
1111 pp 2010; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Comprehensive and practical guidance for dealing with the growing number of federal regulations that must be addressed by human resources (HR) managers and benefits specialists. Describes the essential requirements and administrative processes necessary to comply with each regulation. Suggestions are offered for avoiding the most common litigation threats and handling various types of employee problems. Includes numerous exhibits, checklists, forms, and do’s and don’ts. The Equal Pay Act, ERISA, COBRA, ADA, HIPAA, FMLA, Social Security, worker’s compensation and unemployment insurance is just a sampling of the laws, regulations and programs covered. A state-by-state guide to laws concerning temporary disability benefits, pay practices, workplace health and safety, layoff notices and drug testing is also included. Includes information on workplace ethics.
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COBRA Premium Subsidy Extended.
Segal Company: Bulletin; pp 1-2 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In December 2009, President Obama signed into law an extension of COBRA premium assistance, which had been established through the American Recovery and Reinvestment Act. The window for premium assistance eligibility expands to the end of February 2010, and the total length of subsidy grows from nine months to 15 months. The law includes a change to an IRS interpretation to protect those who are laid off at the end of the eligibility window and not eligible for COBRA until the next day. It also permits those whose subsidy ran out to retroactively pay premiums and extend coverage. Plan administrators face notification requirements, some requiring mailing by February 17, 2010.
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Court Upholds Denial of Benefits to Participant's Former Spouse.
Benefits & Compensation Legal & Legislative Reporter; v43 no12 p 9 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The plaintiff in Ludwig v. Carpenters Health & Welfare Fund of Philadelphia & Vicinity et al. is the ex wife of a participant in health, savings and pension plans. The divorce decree detailed awards for the plaintiff, including pension and savings shares, lump sum distribution timing and COBRA eligibility. Seven months after the divorce, the plans got written notice of the event. The plans notified the plaintiff that the divorce decree conditions could not be met, and she was ineligible for COBRA because notification occurred after 60 following the qualifying event. The U.S. District Court for the Eastern District of Pennsylvania upheld the plan administrator on all counts. The court found insufficient evidence for an equitable estoppel claim based on an alleged misrepresentation by a union member about continuing health coverage, and found no right to lump sum distributions.
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Keys to Evaluating Your COBRA Administrator.
Whitney, Jennifer; Employee Benefit News; v23 no15 pp 39-40 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : With rapid changes in COBRA administration, having a good third party administrator (TPA) to rely on is increasingly important for many employers. Good TPAs keep up with regulatory changes and communicate their effects and implications quickly to employers, employees and beneficiaries. They collect and reconcile premiums, monitor and report on eligibility, keep data secure and provide timely interim reports at an employer's request. Contracts should document all responsibilities and compliance with the Health Insurance Portability and Accountability Act, reflect a fair balance of liability and specify the state for any arbitration. An honest assessment of the TPA's prospects for merger or acquisition can avoid surprises.
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New York Expands Health Insurance Coverage for Terminated Employees and Young Adults.
Weyeneth, Jamie A.; Employee Benefit Plan Review; v64 no6 pp 16-18 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In late 2009, New York's governor signed into law an expansion of the state's mini-COBRA rules and a requirement that insurance companies offer policies covering employees' dependents through age 29. Effective for new or amended contracts dated July 1, 2009 or after, the mini COBRA rule extends health coverage from 18 months to 36 months for those who lose their job, with rates up to 102 percent of the full premium. Group health insurance policies must also offer extended coverage to unmarried dependents under 30 years of age. Dependents eligible for coverage through their own jobs or through Medicare are not included. The requirement does not apply to self insured coverage, but employers with both insured and self insured coverage may choose to streamline their eligibility rules. Insurers must provide notice of availability.
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The Broader HR Advisory Role of Employee Benefit Brokers.
Arnstein, Kevin; Employee Benefit Plan Review; v64 no6 pp 5-6 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Benefit brokers can become more valued consultants to HR executives and employees by going beyond their traditional role. They should actively help HR design the best health care benefits program, explore funding options, suggest vendors that meet cost and service requirements and then help negotiate prices. Their involvement should continue through monitoring claims and service, acting as an ombudsman when indicated. Standout brokers help members understand how to navigate filing claims, manage participation details, transition to COBRA and handle problems. The broker's advisory contribution extends to employee benefits communications and promoting employee satisfaction with the plan.
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HSAs: Six Insights for Employees Leaving or Losing a Job.
Johnson, Whitney R.; Benefits & Compensation Digest; v46 no11 pp 24-29 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Even when workers leave employment, their health savings accounts (HSA) continue to be viable. HSA funds can be used to pay for COBRA or new health insurance premiums. Spending on other than medical care incurs federal taxes and a ten percent penalty until the HSA holder reaches age 65 or other limited conditions apply. Contributing to the HSA during the year of job loss or change can be advantageous, as long as the maximum contribution is not exceeded. It is smart to retain the HSA, even with minimum funds, to preserve its establishment date, since expenses incurred prior to a new plan's establishment are ineligible.
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Plaintiff's COBRA Coverage Properly Terminated After Failure to Make Timely Payment.
Benefits & Compensation Legal & Legislative Reporter; v43 no11 p 9 Nov 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The plaintiff in Harris v. United Automobile Insurance Group Inc. et al. sued over termination of extended health coverage under COBRA. He submitted monthly payments on time until one payment that was mailed on its due date and postmarked the following day. Plan documents specified the time requirements and termination of coverage for late receipt of payment. The district court ruled against the plaintiff. The Eleventh Circuit Court of Appeals upheld the ruling, noting the clear specifications, warning to carefully attend to timing and absence of any special arrangement for more lenient timing of payments.
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The Jobs Crisis: Employers, Government, and Support for Workers in an Era of Extended Joblessness.
Keyes, Stephen; HR Advisor: Legal & Practical Guidance; v15 no6 pp 36-43 Nov-Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : From December 2007 to September 2009, the number of unemployed persons in the U.S rose by 7.5 million, and the unemployment rate doubled to 9.8 percent, the highest rate in over 26 years. Employers can take action to prevent layoffs during the recession, including implementing furlough programs and cutting pay or hours. The U.S. government is assisting unemployed workers with extended unemployment insurance, training and education for displaced workers and COBRA subsidies. Employers and governments can work together to ease the impact of unemployment through work sharing programs, under which workers cut to part time status receive partial unemployment insurance benefits, and the use of tax incentives for employers who create new jobs.
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Group Health Insurance: New Law Will Have Significant Impact on Group Health Plans Insured in New York.
Hamburger, Paul M.; Boyles, Jonathan J.; BNA's Pension & Benefits Reporter; v36 p 2030 Sep 1, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : On July 29, 2009 the state of New York passed laws extending dependent coverage and the state's so-called mini-COBRA coverage. Under the first law, employers must either offer dependent coverage through age 29 or offer COBRA-like mini-coverage, which may raise questions about its synergy with actual COBRA benefits. The second law extends mini-COBRA coverage to 36 months. These changes technically apply only to insured plans, but self-insured plans may want to consider bringing their benefits in line with the revised insured plan requirements.
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ARRA COBRA Premium Subsidy Law.
Hamburger, Paul M.; Enstice, Joanna C.; Benefits Law Journal; v22 no3 pp 11-35 Autumn 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Under the American Recovery and Reinvestment Act (ARRA), the federal government provides a 65 percent subsidy to eligible individuals to pay for COBRA premiums. The employer pays the costs up front and later receives a tax credit for their payment. Assistance is available for up to nine months starting February 17, 2009 for those involuntarily terminated between September 1, 2008 and December 31, 2009. The subsidy is reduced for higher earning individuals and not available to joint tax filers earning over $290,000. Employers are responsible for notifying all eligible individuals about the COBRA subsidy. ARRA increases the benefit available through the Health Coverage Tax Credit.
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ERISA: Life After the Stock Market Shock.
Baker, James P.; Benefits Law Journal; v22 no3 pp 90-102 Autumn 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : No one knows exactly why the credit and stock crashes of 2008 occurred, but commentators point to a number of events. The confluence of federal pressure to make more Americans homeowners, the Federal Reserve's raising of interest rates to combat inflation beginning in 2004 and the popularity of credit default swaps were major factors. The credit crisis has led to a number of new problems for ERISA fiduciaries, including new funding mandates, new and complex amendments to COBRA, a requirement for independent valuation of hedge funds and a resurgence in ERISA lawsuits against fiduciaries. In response to these problems, fiduciaries must investigate whether the plan's investments are still satisfying plan policy and thoroughly document that investigation.
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Legal Landmines for Employee Benefit Plan Sponsors During Bad Economic Times.
Baker, James P.; Abbey, David M.; Employee Benefit Plan Review; v64 no3 pp 11-17 Sep 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Employers having to reduce employee benefits or trim their workforce must be aware of the legal risks they face. Underfunded plans are bound by benefits restrictions under the Pension Protection Act. COBRA amendments of 2009 involve significant employer involvement. Pending legislation in late 2009 may affect providing investment advice and transparency of plan fees. Lawsuits are multiplying over issues including cuts in retiree health benefits, questionable fiduciary responsibility, securities lending, employee benefit discrimination and plan communications. Plan terminations and release of claims on termination of employment are other potential hazards demanding an employer's attention when cuts are contemplated.
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Health Care: COBRA Enrollment Seen Doubling After Offer of Premium Assistance, Hewitt Reports.
Wyand, Michael W.; Daily Labor Report; no159 p A2 Aug 20, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Analysis of takeup rates for COBRA following the subsidy offered under the American Recovery and Reinvestment Act shows enrollment jumped from 19 percent between September 2008 and February 2009 to 38 percent from March to June 2009. The numbers reflect 300 of the largest companies in the U.S. with 8 million workers total. The figures are supported by the Employee Benefits Security Administration, which has seen sharply higher numbers of applications and inquiries. By sector, industrial manufacturers saw an 800 percent increase in COBRA enrollments, followed by a 300 percent increase among construction, leisure and retail firms.
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Health Care Reform: New York Governor Signs Bills Revising Managed Care Protections.
Silverman, Gerald B.; BNA's Pension & Benefits Reporter; v36 p 1821 Aug 4, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Three health care bills were signed into law by New York's Governor David A. Paterson. The first extends consumer protection provisions by recognizing network providers even when a referral is made by an out-of-network physician, shortening payment time for claims submitted electronically and banning denial of payments involving coordination of benefits. A second bill extends New York's mini COBRA law to 36 months and applies it to employers with under 20 employees. The third bill mandates that employers offer COBRA-like coverage for employees' single young adult children through age 29, without requiring that the employer cover the cost.
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Recession Takes Hold: More Were Eligible, Fewer Elected, Costs Stay High.
Employee Benefit Plan Review; v64 no2 pp 27-33 Aug 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In Spring 2009, Spencer's Benefits Reports conducted its 16th survey of employers' and health plan administrators' experiences with COBRA. While average annual health care costs were about 26 percent above 2004 levels among companies that reported costs, average COBRA costs were about 32 percent higher than in 2004 and 53 percent higher than the overall average. In 2009, 16.87 percent of employees became eligible for continuation of coverage, significantly above the 10.37 percent 20-year average. The survey identified the four major problems with COBRA coverage laws: cost of coverage, complexity of the laws and regulations, expansions to the original COBRA program and the collection of COBRA premium payments.
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Storm Coming for Self-Funded Multiemployer Health Plans.
McSweeney, David; Niehus, Barbara P.; Ermer, David; Benefits & Compensation Digest; v46 no8 pp 18-22 Aug 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In the opinions of an insurance executive, actuary and attorney, rising costs are on the horizon for self-funded multiemployer health plans. The COBRA subsidy and anxiety over job loss will prompt many to seek services, and Michelle's Law expands eligibility. Changes in medical coding will create costly errors. Insurers and self-insured plans will be on the receiving end of cost shifting from Medicare, Medicaid and the State Children's Health Insurance Program. The Mental Health Parity Act, Genetic Information Nondisclosure Act and revised reasonable and customary charge tables will raise costs further. Strategic responses for plans include analyzing data early to spot and respond to trends and auditing member and dependent eligibility.
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COBRA 2009: A Practical Primer.
Meharry, Brian; Jancar, Kristi; Journal of Compensation and Benefits; v25 no4 pp 24-27 Jul-Aug 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Under the American Recovery and Reinvestment Act (ARRA), the federal government provides a 65 percent subsidy for eligible former employees to purchase COBRA coverage. But the subsidy presents significant challenges for cash-strapped employers who must front the cost until reimbursed by the government. The degree of economic impact depends largely on how many affected employees opt for the subsidy. Employers also face compliance administration costs associated with required notifications. Numbers of individuals opting for COBRA coverage can increase adverse selection in the plan, or employers in dire financial straits may ultimately cancel group coverage, leaving laid off and surviving employees uncovered.
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New COBRA Subsidy Requirements.
Glover, Marjorie M.; Kurth, Rachel M.; Employee Benefit Plan Review; v64 no1 pp 24-30 Jul 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Under the American Recovery and Reinvestment Act, the federal government will subsidize up to 65 percent of COBRA premiums for employees laid off between September 1, 2008 and December 31, 2009. Employers must provide notification of COBRA rights to these employees and beneficiaries, keep detailed records and report subsidy actions to the government. Highly compensated individuals and those eligible for any other group health plans are not eligible. The subsidy, lasting nine months in most cases, is initially paid by the employer but then reimbursed as a payroll tax credit. Election of a lower cost health plan may be offered. Employers must coordinate HR, payroll, accounting, legal and other internal departments as well as third party administrators and insurers.
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Summary of Alternatives Regarding the Federal COBRA Subsidy.
Palmieri, Frank; Employee Benefit News; v23 no8 pp 46-47 Jun 15, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Employers face some choices beyond the basic COBRA federal subsidy for employees involuntarily terminated between September 1, 2008 and December 31, 2009. The basic approach is to pay 65 percent of the COBRA premium and submit for a payroll tax credit using Form 941. If an employer subsidizes an employee's COBRA payment, the employer's subsidy time shortens the time the employee is eligible for the federal subsidy. The employer might instead offer severance benefits in place of an employer subsidy. If the health plan or stop loss insurer permits, the employer can delay the start of the federal subsidy by measuring the COBRA period from the date of loss of coverage rather than the layoff date.
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Employee Benefits: Economy-Driven Furloughs May Impact Pension, Health, Fringe Benefits.
Ben-Yosef, Andrea L.; Daily Labor Report; no105 p C1 Jun 4, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Some employers are responding to the economic crisis of 2008-2009 by instituting unpaid leave programs. An April 2009 Watson Wyatt survey found that 22 percent of employers had reduced their work weeks, 17 percent had instituted mandatory furloughs and 11 percent had instituted voluntary furloughs. While employees eligible for 401(k) contributions or health benefits are unlikely to lose eligibility due to a furlough, those who are not yet eligible may find that the furlough hinders their ability to participate or receive matching contributions. In some cases, reduced hours may mean no vesting credit for the year in pension plans. Employees on involuntary furlough are eligible for a COBRA subsidy under the American Recovery and Reinvestment Act of 2009, which may in some cases encourage employers to cut health benefits to furloughed employees.
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