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Compliance Briefing Center


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to Manage Benefits}

COBRA Briefing: Important Information Regarding the Temporary Extension Act of 2010

WageWorks ARRA Bulletin

Congress recently passed the Temporary ExtensionAct of 2010, which, in addition to extending unemployment benefits, extends and expands the COBRA premium assistance subsidy originally provided by the American Recovery and Reinvestment Act (ARRA). Included in the Temporary Extension Act are the requirements for new notices that must be sent to all affected individuals.

Specifically, the Temporary Extension Act:

  • Extends the end of the eligibility period for the COBRA subsidy from February 28, 2010 to March 31, 2010. This means that individuals involuntarily terminated between September 1, 2008 and March 31, 2010 are now eligible for 15 months of subsidized COBRA premiums—with the employee paying only 35% of the actual COBRA premium.    
  • Expands the COBRA subsidy to those who were involuntarily terminated between March 2, 2010 and March 31, 2010 after losing their health insurance coverage as a result of a reduction in hours sometime between September 1, 2008 and March 31, 2010.
    • Anyone in this category who did not make a COBRA election at the time of the reduction in hours (or who made one but subsequently discontinued coverage) must be issued a new COBRA notice within 60 days of the involuntary termination, as if the involuntary termination was a new qualifying event.
    • This notice must explain the rules regarding their special COBRA election period. While individuals are eligible to receive the COBRA coverage as of the date of the reduction in hours, they can choose to begin coverage as of their termination date. The subsidy, however, can only be applied as of the termination date.

Currently additional legislation is under consideration that could extend the subsidy through December 31, 2010 with a vote expected before the end of March.

WageWorks® is fully prepared to comply with the new notice requirements resulting from the Temporary Extension Act; however, we are hoping to have additional details regarding the pending extension by the end of this month.  In the interest of minimizing costs, WageWorks will postpone the re-notification process until the end of March or early April.  At that time, WageWorks will provide the notices to all impacted participants for a fee of $6.00 per notice.

Our goal is to comply with all regulatory changes to the ARRA Premium Subsidy and other regulatory and legislative changes on your behalf.  We will continue to provide updates as they occur.

Please contact your COBRA account manager if you have any questions.
The link below provides a current DOL Fact Sheet: http://www.dol.gov/ebsa/cobra.html