New COBRA subsidy as a result of the American Recovery and Reinvestment Act of 2009 (ARRA) Effective 2/17/09

Terms to know Assistance eligible individual: – Any employee whose employment is involuntarily terminated and qualifies for the ARRA subsidy. Involuntary termination – The law is vague. At this time we know it definitely covers those losing their job by lay-off, but not Gross misconduct Quitting your job Becoming an overage dependent

Overview of COBRA changes Assistance eligible individuals will only pay 35% of COBRA premiums for up to 9 months. Self funded employers, employers required to offer COBRA and insurance companies (for small fully insured benefit plans) will provide a 65% subsidy. In turn the amount of subsidy will be given back in the form of a quarterly tax credit. Two types of notifications must be communicated to assistance eligible individuals and dependents during the initial notification period.

Notifications A notice of the right to premium assistance for those that have a qualifying event after 2/17/09 A notice of the right to premium assistance and a special enrollment period for those that had a qualifying event prior to 2/17/09

Assistance Eligible Individuals: What’s in it for them? Temporary financial assistance for 65% of COBRA premiums for 9 months. New enrollment period for those who did not initially elect COBRA. Lapse of coverage period does not count. Pre- existing limitations are waived. New enrollment for those who dropped COBRA coverage prior to 2/17/09. Lapse of coverage period does not count. Pre- existing limitations are waived. Coverage begins the first coverage period after February 17, 2009; most will be 3/1/09.

Who is eligible? Employment ended involuntarily between September 1, 2008 and December 31, Spouses and dependents who meet the definition of a qualified beneficiary are included. Current COBRA members that are not 100% subsidized by an employer plan

Who is not eligible? Employment ended prior to 9/1/08 Employment ended after 12/31/09 Employment ended as a result of voluntary termination, divorce or loss of dependent status Those who receive a 100% premium subsidy from an employer Those who are eligible for other group health coverage (such as a spouse’s plan) or Medicare Note: The subsidy phases out for individuals whose income exceeds certain amounts.

Employer responsibility (fully insured benefit plans) Contact the COBRA Administrator – Determine how and when to expect this additional part of the monthly billing. – Confirm the COBRA premium paid by the assistance eligible individual is able to be billed the adjusted amount for the appropriate period of time. – Determine if the notification / communication to the assistance eligible individual requirements will be performed and if there is a cost. A notice of the right to premium assistance for those that have a qualifying event after 2/17/09 A notice of the right to premium assistance and a special enrollment period for those that had a qualifying event prior to 2/17/09. Pay the subsidy. To receive a tax credit equal to the amount of subsidy provided for each assistance eligible individual. The use of an updated 941 form is required in order to receive the credit on a quarterly basis. Confirm that the initial COBRA notification documentation used by the plan is updated to include ARRA subsidy language.

Employer responsibility (self-funded plans): Contact the COBRA Administrator – Determine how and when to expect changes to the administration of the 35% COBRA premiums for assistance eligible employees – Determine if the notification / communication to the assistance eligible employee requirements will be performed and if there is a cost. A notice of the right to premium assistance for those that have a qualifying event after 2/17/09 A notice of the right to premium assistance and a special enrollment period for those that had a qualifying event prior to 2/17/09. – Confirm that the COBRA Administrator is ARRA compliant. Pay the subsidy. Receive a tax credit equal to the amount of subsidy provided for each assistance eligible individual. The use of an updated 941 form is required in order to receive the credit on a quarterly basis. Confirm that the initial COBRA notification documentation used by the plan is updated to include ARRA subsidy language.

Important Dates 2/17/09: The ARRA law goes into effect. 9/1/08 through 12/31/09: The key dates of a qualifying involuntary termination that allows the individuals to utilize a subsidy for 9 months. 3/19/09: The tentative deadline for the Department of Labor to release a model language to communicate the effects of ARRA to assistance eligible individuals. 4/17/09: The deadline for notifying assistance eligible individuals of the subsidy and any special enrollments.

SIHO’s implementation plan Identify the assistance eligible employees for all plans we administer by 3/27/09. Complete notification requirements to current and future assistance eligible employees for all plans we administer by 4/1/09. Assistance in updating initial COBRA notification documentation. Assistance in amending Self-Funded Plan Documents with new COBRA changes These services are included in our COBRA administration fees. There is no extra cost to the employer.

More Information Visit the Department of Labor website to view the special section regarding American Recovery and Reinvestment Act of 2009 (ARRA)