On July 6, 2015, President Obama signed the Trade Preferences Extension Act of 2015. The Act retroactively reinstated a refundable federal tax credit of up to 72.5% of the cost of qualified health insurance premiums – including COBRA. The tax credit is generally for individuals in certain industries whose jobs are lost or threatened due to foreign-trade related circumstances and for individuals over age 55 receiving payments from the PBGC relating to a terminated, underfunded pension plan.
The COBRA Blog
There are several tricky scenarios that arise when coordinating COBRA coverage under the Affordable Care Act (ACA). Case in point: Alex lost his job in August and elected COBRA coverage. However, he subsequently stopped paying his COBRA premiums and his COBRA coverage ended effective 10-31-14. He thought that he could score more affordable coverage through the Marketplace, but soon learned that because he let his COBRA expire, he was not eligible to apply for Marketplace coverage until the next Open Enrollment period, and then, his coverage would not become effective until January 1.
In this crazy post-ACA world, everyone is struggling to learn how the new rules apply to COBRA administration. Now more than ever, it is important to revisit the basic building blocks of COBRA.
On June 12, 2015, the Departments of Labor, Treasury and Health and Human Services finalized regulations explaining the requirement to provide a Summary of Benefits and Coverage (SBC). The Affordable Care Act (ACA) created the SBC requirement to provide individuals with health plan information in an easily understandable format with the hope that these individuals could better compare health insurance options.
Regardless of what you may have heard, COBRA administration continues to be required even with health reform and the elimination of pre-existing condition exclusions. That said, staying up to date with both the Affordable Care Act and COBRA compliance requirements can be overwhelming, and therefore, outsourcing COBRA administration has grown in popularity over the years. In 2004, the Society of HR Managers issued a study indicating that 38 percent of employers outsource their COBRA administration. In the last 10 years, that number has likely doubled.
We’ve all heard that 50 percent of marriages end in divorce. Regardless of the accuracy of this statement, it is reasonably certain that divorce or legal separation will happen within a workforce with 20 or more full time employees (the federal COBRA threshold). Thus, just like death, taxes, and Affordable Care Act reporting, divorce is one of those unpleasant certainties for which we must prepare.
Employers establish wellness plans to promote healthy lifestyles among employees. Healthier employees hopefully leads to better control of costs under the employer’s health plan. However, the individuals responsible for the employer’s wellness plan compliance will likely be left with a headache.
Thanks to the Affordable Care Act (ACA), the compliance spotlight has shifted away from COBRA. Some opinion pieces have even called for the death of COBRA. These opinions overlook many of COBRA’s key benefits. For example, COBRA allows participants to take advantage of dollars already spent to satisfy deductibles. Unlike Marketplace coverage, COBRA provides retroactive coverage - thus preventing a gap. COBRA also takes into account all of the members of the family (creating Qualified Beneficiaries), not just the employee.
On April 1, 2015, the IRS published its most recent Employee Plans Newsletter. You can access the newsletter at http://www.irs.gov/Retirement-Plans/Employee-Plans-News.
A recent case illustration:
Leaves of absence can cause major COBRA headaches. In one recent case (Cole v. Trinity Health Corp., 774 F.3d 423, 8th Cir. Dec. 15, 2014), an employee exhausted all available short term disability leave and then applied for long term disability benefits (LTD). The LTD carrier reviewed her application for three months and ultimately denied LTD benefits.
Tags: COBRA leave of absence