Premium Assistance for COBRA and State Continuation Coverage Extended to Cover Workers Involuntarily Terminated Through March 31, 2010 and to Last for 15 Month Maximum (see below)

Background: When an employee loses his or her job, employers subject to COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) or any State continuation coverage law (also known as "mini-COBRA" laws), must offer the employee and any family members covered by his or her group health plan (qualified beneficiaries) the opportunity to purchase the insurance coverage. However, many unemployed individuals and family members cannot afford the cost of the continuation coverage. As discussed below, the American Recovery and Reinvestment Act of 2009 (ARRA) provides a 65 percent subsidy covering the cost of premiums for all involuntarily terminated workers and related qualified beneficiaries.  

COBRA

This section provides information about public sector COBRA continuation of coverage. The information in this section will be of interest to state and local government employers that maintain group health plan coverage for their employees, their plan administrators and plan enrollees.

The landmark COBRA health benefit provisions became law in 1986. The law amends the Employee Retirement Income Security Act of 1974 (ERISA), the Internal Revenue Code and the Public Health Service Act (PHS Act) to provide continuation of employer-sponsored group health coverage that otherwise might be terminated. CMS has advisory jurisdiction for the COBRA law as it applies to state and local government (public sector) employers and their group health plans. (See Related Link Outside CMS at the bottom of this page.) Click on "Federal Jurisdiction" on the left navigation bar for information about contacting the federal agencies that administer private sector COBRA and the continuation of coverage provisions for federal employees.

The COBRA law generally applies to group health plans maintained by employers with 20 or more employees in the prior year. The law does not, however, apply to plans sponsored by the governments of the District of Columbia or any territory or possession of the United States, certain church-related organizations or the federal government. (The Federal Employees Health Benefit Program is subject to generally similar, although not parallel, temporary continuation of coverage provisions under the Federal Employees Health Benefits Amendments Act of 1988.)

Individuals who work for a state or local government employer, and their dependents, should be aware of their rights regarding COBRA. A good starting point is reading your summary plan description (SPD) booklet, if a state or local government employer distributes an SPD to its employees. Most of the specific rules on COBRA rights may be found there or with the person who manages your health benefits plan. Also, this Website provides detailed information about COBRA. Use the left navigation bar to access information related to a specific area of COBRA-related inquiry. Also, see "COBRA Helpful Tips" in the downloads section below.  Additionally, the "More Information" page contains a link to COBRA questions and answers. 

If you are unable to find the COBRA-related information you are looking for on this Website, you may e-mail us at phig@cms.hhs.gov, except for ARRA COBRA related inquiries which should be emailed to continuationcoverage@maximus.com.

Premium Assistance

Section 3001 of ARRA provides a subsidy to all involuntarily terminated workers and their dependents covering 65 percent of the cost of COBRA premiums under ERISA and the PHS Act and the premium for continuation coverage for federal employees.  The subsidy also covers 65 percent of the cost of State continuation coverage premiums provided the state continuation coverage is comparable to COBRA. Before section 3001 was amended, premium assistance under ARRA lasted up to nine months. At that time ARRA required that the employee: (1) become eligible for continuation coverage during the period from September 1, 2008 up through December 31, 2009; (2) on account of being involuntarily terminated during that same time period; and (3) that the employee or family member elect continuation coverage.

Extension of Benefit: On December 19, 2009, the President signed into law the Department of Defense Appropriations Act of 2010, which extended the subsidy in several ways. For example, employees who are involuntarily terminated during an additional two months--January and February 2010--may be eligible to apply for premium assistance. And the premium assistance now may last up to 15 months for everyone covered by the extension. For instance, workers and family members who at the time of enactment were still receiving nine months premium assistance may, if otherwise eligible, receive up to six more months premium assistance (for a total of 15 months coverage). Beneficiaries whose nine months of premium assistance expired before the extension was signed into law are afforded the same opportunity to receive up to six months more premium assistance provided they pay their 35 percent due for unpaid premiums within 60 days of such enactment or, if later, within 30 days after receiving notice of the extension from their employers or issuers. Those individuals who continued to pay for their continuation coverage after their nine months premium assistance ended and before enactment of the extension may receive credit or a refund for payments above 35 percent of the premium cost.

ARRA, as amended, also changed the first of the three part eligibility requirement above such that the date of the event that qualifies the individual for continuation coverage--rather than the date that the continuation coverage itself starts--determines whether an individual is eligible for premium assistance. (That event, however, must still be an involuntary termination and the qualified beneficiary must still elect continuation coverage.)

On March 2, 2010, President Obama signed into law the "Temporary Extension Act of 2010" which included a second extension of the premium assistance benefit. The law further amends the COBRA ARRA law in the following ways:

1. Extends the period in which one can be involuntarily terminated and eligible for premium assistance to March 31, 2010;
2. Extends the premium assistance to those individuals who initially qualified for continuation coverage because of a reduction of hours and were later involuntarily terminated provided that the reduction of hours took effect on or after September 1, 2008 and the involuntary termination occurred on or after March 2, 2010. The period for counting the months of eligibility for continuation coverage must begin at the point of the initial qualifying event (reduction of hours). Upon being involuntarily terminated, these individuals must be provided a second COBRA election notice with information on how to apply for the premium assistance.
3. Provides the Departments of Labor and HHS the authority to impose Civil Monetary Penalties (CMPs) on employers and insurance companies in the amount of $110 per day for failure to comply with the determinations on the Request for Review of the Denials of Premium Assistance after 10 days after the date of the employer's or insurance company's receipt of the determination.

Expedited Review: As has always been the case under ARRA, individuals who are denied access to premium assistance by their employers or issuers can request a determination from the DOL or Department of Health and Human Services (DHHS) via CMS. This expedited review must be completed within 15 business days after each agency receives such a request. The DOL handles all appeals regarding plans under ERISA, while CMS handles all requests for review regarding public sector (state and local government with 20 or more employees) employer plans, federal government (including the Federal Employees Health Benefits Program), and State continuation coverage (mini-COBRA) laws. Each Department has developed a similar, but separate form. 

Contact Information: Below are sources for three different Federal components overseeing continuation coverage benefits under ARRA, as well as a central source providing State contact information regarding continuation coverage:

(1) Centers for Medicare & Medicaid Services (CMS). For more information about ARRA, go to the "Downloads" section at the bottom of this page.  You may contact the CMS-sponsored premium assistance continuation coverage help desk via e-mail at continuationcoverage@maximus.com or call toll-free at (866) 400-6689. Staff members are available to help you from 8 a.m. until 8 p.m. ET.  A form to request review by CMS if you are denied premium assistance is located under the "Downloads" section.  It is entitled "Request for Review If You Have Been Denied Premium Assistance".  The link to the Premium Assistance Appeals Website is located in the "Related Links Outside CMS" section.  Additionally, help desk staff members would be glad to assist you with any questions about completing the application.  You can mail your completed form to:

MAXIMUS Federal Services, Inc.

COBRA--Continuation Coverage

Assistance Appeals Project

800 Cross Keys Office Park

First Floor - Suite 822

Fairport, New York  14450

Alternatively, you can fax your form, toll-free, to (866) 941-0170.  To confirm receipt when faxing, you may call the toll-free number (866) 400-6689.

(2) State Departments of Insurance (DOIs). Your State DOI can advise you whether it requires State continuation coverage (or mini-COBRA plans) and, if so, whether it considers that coverage "comparable" such that you might qualify for ARRA premium assistance. Go to "Related Links Inside CMS," select the "Health Insurance Reform for Consumers" Web page, scroll to the "Downloads" section, and select "DOI Contact Information - State Status Chart".  

(3) Department of Labor (DOL). The DOL can be reached at:  Employee Benefits Security Administration, 1-866-444-3272. You may obtain information about DOL review of your denial of the ARRA premium at http://www.dol.gov/ebsa/COBRA/main.html and an electronic form is available at: https://www.askebsa.dol.gov/COBRA/?submit=Online+Application+%3E%3E. Or for a paper form link below to the "ARRA COBRA DOL Form" located under the "Downloads" section. You may also link to ARRA information posted on the DOL Website below under "Related Links Outside CMS." The DOL website includes Model ARRA-related notices and forms.

(4) The Department of the Treasury (Treasury) and the Internal Revenue Service (IRS). Treasury through the IRS oversees tax issues for all individuals and group health plans affected by the ARRA premium assistance. Its Website contains detailed information (see, for instance, http://www.irs.gov/pub/irs-drop/n-09-27.pdf). You may also link to ARRA information posted on the IRS Website below under "Related Links Outside CMS."