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Frequently Asked Questions
About COBRA Premium Assistance
On February 17, 2009 President Obama signed the American Recovery and Reinvestment Act (ARRA) into law along with amendments (H.R. 3326 and H.R. 4691). ARRA provides for a government funded subsidy to help certain involuntarily terminated employees pay for qualifying COBRA coverage. It also allows for an extension of the COBRA election period for certain individuals. This FAQ provides only a summary of your rights and obligations. You are responsible for reading all other notices for a full description of your rights and responsibilities regarding the COBRA premium assistance and extended election period.
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For periods of coverage beginning on or after the date the new law was signed, eligible individuals will only be required to pay 35% of their total COBRA premium. The federal government will subsidize the remaining 65%.
Under the amended ARRA regulations, any COBRA Qualified Beneficiary that became eligible for COBRA continuation coverage as a result of an involuntary termination of employment that occurred during the period beginning September 1, 2008 and ending March 31, 2010 and who elected COBRA is eligible for the premium assistance.
These individuals are known as “Assistance Eligible Individuals” or “AEIs”.
Under the amended ARRA regulations, AEIs are entitled to the premium assistance for up to 15 months, however, entitlement ends if you:
1. Become eligible for other group health coverage (even if you do not elect such coverage) or for benefits under Medicare;
2. When your COBRA coverage period expires; or
3. If COBRA coverage terminates early for some other reason (such as failure to pay the required premium payment). If you become eligible for other group coverage, you must provide notice to the plan or face a penalty equal to 110% of the subsidy received after becoming eligible for such other coverage.
If you become eligible for other group coverage, you must provide notice to the plan or face a penalty equal to 110% of the subsidy received after becoming eligible for such other coverage.
Yes, if you are currently on COBRA and have exhausted your 9-months of ARRA, you will be automatically enrolled in the additional 6-months of ARRA premium assistance to a maximum of 15-months, provided your COBRA coverage period does not expire before the end of the 15-months or you become ineligible for ARRA premium assistance.
Yes, if you were previously on COBRA and have exhausted your 9-months of ARRA and terminated your COBRA coverage due to losing ARRA premium assistance, you will be able to re-enroll in COBRA to receive the additional 6-months of ARRA premium assistance to a maximum of 15-months, provided your COBRA coverage period does not expire before the end of the 15-months or you become ineligible for ARRA premium assistance.
If you had a Qualifying Event beginning November 1, 2009, and failed to elect COBRA, you will be given another opportunity to elect COBRA and ARRA premium assistance. Generally, you will have 60-days from the date that you are provided with your “second chance” election notice to elect COBRA. If you elect the COBRA coverage, your coverage and ARRA premium assistance will become effective back to your original loss of coverage due to your initial Qualifying Event.
If you have made any benefit changes (such as dropping a benefit plan or reducing your coverage levels) due to your loss of ARRA premium assistance, you may contact WageWorks in writing a request for consideration that coverage be reinstated retro-actively to the date in which your ARRA was exhausted. This request must be provided to WageWorks within 30-days of your ARRA notification.
Yes. If you have modified adjusted gross income in excess of $125,000 ($250,000 for joint filers) in the year in which you receive premium assistance, you may have to repay some or all of your subsidy when you file your next tax return. If you have questions regarding your personal tax situation and how repayment requirements may apply, please discuss with your tax advisor.
The premium assistance is a voluntary program. You have the option to elect to receive premium assistance or to decline your right to it. Please note: If you elect to decline the premium assistance, you will not be eligible to elect it at a later time.
If you are eligible for the premium assistance and already submitted your full COBRA premium for the next consecutive coverage period, any excess premium will be applied to future months of coverage. If the total overpayment amount cannot be used within 180-days, you will be issued a refund check.
If you are already receiving premium assistance from your employer, then you will only be responsible for 35% of the premium amount that you are currently paying. However, your enrollment in the federal subsidy program will be concurrent with your employer paid subsidy. You will not be eligible for an additional 15 months of federal subsidy after your existing employer paid subsidy is completed.
An individual who was denied the subsidy may appeal the decision. The Department of Labor (DOL) will handle all appeals which relate to the private sector employer plans and if denied you will need to submit your appeal for the DOL on a U.S. Department of Labor application form, available at www.dol.gov/COBRA. These forms can be completed online or mailed or faxed as the instructions indicate on the form. The Department of Health and Human Services (HHS) will handle appeals for the Federal, State and local governmental employees. You will need to contact HHS in order to get the appropriate form for the appeal process.
However, before filing an appeal, you may wish to speak with an Employee Benefits Security Administration Benefits Advisor at 1.866.444.3272 regarding your specific situation.