Founded in 1986 to help employers and insurance professionals navigate complex benefit-related federal regulations, Infinisource has streamlined the complex and time-consuming procedures that all firms must adhere to. Benefit managers and individual members will be pleased to find that the new online tracking capacities now available through Infinisource will make it easier both to track payments and comply with regulations.

Administrative Procedures

Firms with an average of 20 or more employees in the previous calendar year, and, thus subject to COBRA, must contract directly with Infinisource. These firms may, however, choose to contract directly with another COBRA administrator or to self-administer these benefits. The Trust will, however, absorb the costs of administration for firms selecting Infinisource as their provider. The Trust contracts directly with Infinisource on behalf of its CalCOBRA firms (i.e., those with 2–19 employees). Whether employees qualify for COBRA or CalCOBRA, firm administrators should communicate all qualifying event information to Banyan Administrators.

The “COBRA/CalCOBRA Notice and Notification Form” is available online at the ProtectPlus website (www.cpaprotectplus.com). To access the form, click through “Rates & Forms” on the menu bar and choose “other.” The completed form should be mailed or faxed to Banyan within 30 days of the qualifying event for COBRA, or 31 days for CalCOBRA. If you need any help completing the form, call Banyan Administrators at (877) 480-7923. The form contains a checkbox for each legally defined “qualifying event” as well as a line asking whether termination was voluntary or involuntary. If the firm has contracted (or wants to contract) with Infinisource, Banyan will convey this information to Infinisource, which will determine if former employees qualify for benefits. If they do, Infinisource will set up an online tracking system and, at the same time, send out a Qualifying Event Notice with a user ID and password for gaining access to that information. Infinisource will handle the billing to CalCOBRA/COBRA members directly, and it will also bill COBRA firms for the subsidy portion that they owe on their ex-employees’ premiums.

Former employees who have exhausted their 18-month COBRA benefits have the option to continue their coverage under CalCOBRA. In advance of their COBRA termination, they will receive an election package from Infinisource to continue on CalCOBRA.

ARRA Continuation

Beginning February 17, 2009 the American Recovery and Reinvestment Act (ARRA) offered individuals who would ordinarily qualify for COBRA coverage—and whose income fell below a specified level—the opportunity to continue COBRA coverage at a reduced cost. It also offered these individuals the opportunity to newly enroll in COBRA.

On April 15, 2010 the benefits of the ARRA were extended by HR 4851 until May 31, 2010 for qualifying events on or after September 1, 2008. For eligible individuals, the federal government subsidizes 65 percent of COBRA premiums while the individual subscriber pays 35 percent. Under the legislation, premiums for medical, dental, and vision policies can be covered for a maximum of 15 months. As with COBRA and CalCOBRA, Infinisource administers this program for ProtectPlus subscriber firms and their former employees.

Nevertheless, since further legislation is pending in the House that would again extend this program, firms should keep themselves informed. In addition, Infinisource will work with employers to make sure that they stay in compliance.

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An Employee’s Guide to Health Benefits Under COBRA – The Consolidated Omnibus Budget Reconciliation Act

Note: This publication contains information about the COBRA premium reduction provisions of the American Recovery and Reinvestment Act of 2009 (ARRA). This publication has not been updated for recent amendments made to ARRA. For updated information on ARRA and its amendments, please see the COBRA Premium Reduction Fact Sheet.

Premium Reduction Following Involuntary Termination

If you involuntarily lost your job at any time from September 1, 2008 through February 28, 2010, you and/or each member of your family may be eligible for a COBRA premium reduction under the American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Department of Defense Appropriations Act, 2010 (2010 DOD Act). For individuals who are eligible, it is a 65 percent reduction in COBRA premiums for periods of coverage beginning on or after February 17, 2009. The premium reduction for an individual ends after 15 months of the reduction, upon eligibility for other group coverage (or Medicare), or when the maximum period for COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must inform their plans if they become eligible for coverage under another group health plan or Medicare.

You and/or each member of your family are eligible for the premium reduction if:

• You have a qualifying event for continuation coverage under COBRA or a State law that provides comparable continuation coverage (for example, so-called “mini-COBRA” laws) that is the employee’s involuntary termination at any point from September 1, 2008 through February 28, 2010; and
• You elect the COBRA coverage timely.

You are not eligible for the premium reduction if you are eligible for other group health coverage (such as a spouse’s plan) or Medicare.

Your plan administrator should provide a notice about the premium reduction and the 2010 DOD Act extension either separately or along with the required COBRA notice.

The 2010 DOD Act also extended the maximum period for receiving the premium reduction by six months (from nine to 15 months). If you reached the end of the original premium reduction period, you are eligible to receive the premium reduction for an additional six months provided you otherwise remain eligible for the premium reduction program.

In addition, if you reached the end of the original premium reduction period, you are in a “transition period” and have additional time to pay extension-related reduced premiums. A transition period is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. You are in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and you otherwise remain eligible for the premium reduction. You must be provided a notice of the extension within 60 days of the first day of the transition period. Your transition period may include multiple periods of coverage. The retroactive payment(s) for the period(s) of coverage must be made by the later of February 17, 2010, 30 days from when the notice was provided, or the end of the otherwise applicable payment grace period.

Although the employee’s involuntary termination, the qualifying event for continuation coverage under COBRA, must occur by February 28, 2010 to be eligible for the premium reduction, the premium reduction assistance does not end on that date. If you become eligible for the premium reduction by February 28, 2010, you are entitled to receive 15 months of premium assistance as long as you remain eligible. For example, if you started COBRA on November 1, 2009, you would be entitled to premium assistance from November 1, 2009 through January 31, 2011 as long as you remain eligible.

If an employer offers additional coverage options to active employees, the employer may, but is not required to, allow those eligible for the premium reduction to switch coverage from what they had at the time of the qualifying event. However, to retain eligibility for the premium reduction, the different coverage must have the same or lower premium as the original coverage and it can not be limited to only dental, vision, or counseling coverage, a flexible spending account, or an onsite medical clinic. If the plan allows you to change coverage options, it must provide a notice of this opportunity. You will have 90 days after the notice is provided to change your coverage.

The amount of the premium reduction is recaptured for certain high income individuals. If the amount you earn for the year is more than $125,000 (or $250,000 for married couples filing a joint federal income tax return) all or part of the premium reduction may be recaptured by an increase in your income tax liability for the year. If you think that your income may exceed the amounts above, you may wish to consider waiving your right to the premium reduction. For more information, consult your tax preparer or visit the IRS Web page on ARRA.

If your employer, plan or insurer denies you the premium reduction, you may request an expedited review from the Department of Labor. A determination regarding your appeal must be made within 15 business days after receiving your completed application. Visit the COBRA Web page for the application to request the Department’s review as well as additional information on the COBRA premium reduction. You can file the application online or submit it by fax or mail.

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If you lose or have lost work during this period, you need to know about these provisions because they can save you money. Keep in mind, however, that if you voluntarily quit your job you don’t qualify. Moreover, individuals who were fired for negligence or misconduct don’t qualify either.

If you are an employer and let employees go during these 15 months, new rules under this law require action on your part. Among its many features, ARRA provides federal subsides that reduce premiums for nine months of COBRA or Cal-COBRA coverage.

During this nine-month period eligible individuals (and their qualified beneficiaries) are responsible for only 35 percent of their premiums. For COBRA recipients the remaining 65 percent must be paid by their former employer, while for Cal-COBRA recipients, the 65 percent portion must be paid by the insurer. Employer and insurer payments, however, are fully reimbursable through a tax credit.

Another provision of the new law allows COBRA recipients to switch their health coverage to a less expensive policy if that policy is available to all active employees of their former company.

Under the previous law, an eligible employee could only elect to continue coverage under the policy they had at the time they were terminated. To comply with ARRA, employers must amend their existing COBRA notice forms and distribute additional notices that include information about these benefits.

CalCPA member firms with ProtectPlus coverage should take note that Seabury & Smith has already sent letters to all those they believe are eligible under Cal-COBRA. Employers with 20 or more employees who fall under COBRA regulations are themselves responsible for notifying former employees who may be eligible.

If you have questions or concerns regarding these issues, please contact Seabury & Smith customer service at (800) 824-1154. Those with other health insurance coverage should make sure they are in compliance.

The new CalCOBRA legislation, California Assembly Bill 23, is expected to be signed by the Governor by the end of this week. This bill will align the current CalCOBRA legislation with the Federal Subsidy as defined by ARRA (American Recovery and Reinvestment Act). The following are high-level details you should be aware of:

• This bill states that health plans and health insurers have 14 days from the date of enactment to provide proper notification to those individuals who may qualify for the Cal-COBRA subsidy. The Department of Labor (“DOL”) has agreed that the timeliness within which the state mini-COBRA programs must comply is to be determined by the states themselves. The DOL held a call with the California Department of Insurance (“CDI”) and the Department of Managed Health Care (“DMHC”) to assure this is understood by all three regulators.
• The mailing will go out to all individuals who had a qualifying event between Sept. 1, 2008, to the present, regardless of whether or not they had already elected CalCOBRA.
• The bill (AB23) currently states that California residents who were involuntarily terminated from their jobs between Sept. 1, 2008, and the present will qualify for the Cal-COBRA special election period.
• There is a notice letter being developed by Anthem in conjunction with the California Association of Health Plans (“CAHP”) and other health plans in this state. Once finalized, this notice will be deemed approved by both the CDI and DMHC. Anthem will send the notice as soon as possible following the enactment of AB 23.
• Once the bill is finalized and signed into law, Anthem will share a more detailed summary of the specific provisions of this law.

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