|Ted Strickland, Governor
Mary Jo Hudson, Director
50 W. Town Street, Third Floor – Suite 300, Columbus, Ohio 43215
Contacts: Robert Denhard, Public Information Officer at (614) 644-3366
Jarrett Dunbar, Public Information Officer at (614) 644-2475
For Immediate Release
Tuesday, March 24, 2009
Department of Insurance Available to Help Small Employers Understand Requirements of COBRA Subsidy Notice
Subsidy may reduce COBRA cost by 65% for workers who lose their jobs
COLUMBUS – The Ohio Department of Insurance is available to assist small business employers with questions about COBRA and state group continuation requirements regarding health insurance, Director Mary Jo Hudson said today. The Ohio Department of Insurance has posted on its web site, www.insurance.ohio.gov, a model notice to be used to inform former employees of their state continuation coverage rights and notice of the federal premium assistance. On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act, commonly called the Stimulus Plan. The new law provides a subsidy that may reduce by 65% the cost of COBRA and state continuation coverage – sometimes referred to as “mini-COBRA” – health insurance for workers who lose their jobs.
”The Ohio Department of Insurance can provide educational assistance and information to small business employers trying to decipher the new COBRA subsidy requirements,” Director Hudson said. “I also encourage Ohioans who have lost their job and have questions about COBRA health coverage or state continuation coverage to contact us.”
The notice requires employers to notify former employees of the premium subsidy so that former employees can elect to continue their group coverage and receive the subsidy. Ohio small business employers or those with questions about the premium subsidy can call the Department’s consumer hotline at 1-800-686-1526. Free information can also be obtained at www.insurance.ohio.gov.
If an Ohio employer has fewer than 20 employees, those employees receive continuation coverage under the state’s “mini-COBRA” continuation law rather than the federal law. The provisions of the federal stimulus bill are not identical for both groups.
Small employers may have the following questions about the “mini-COBRA” requirements:
Will small employers, those with less than 20 employees, have to pay the 65% of the state continuation coverage premium not paid by the former employee? No. Small employers who contract with an insurance company for health benefits will collect the 35% of the premium from the former employee and submit that as payment in full to the insurance company. The insurance company will claim the credit for the 65% of the premium not paid by the former employee from the IRS.
How long does the subsidy last under state continuation law? Although the federal subsidy lasts for nine months, Ohio continuation coverage only extends for six months. The maximum period of time that a person can receive the subsidy is therefore six months. Under federal law, the subsidy ends when a person is no longer eligible for state continuation coverage or when the individual becomes eligible for other group insurance or Medicare (whichever comes first).
Who is eligible for coverage under the state continuation law? In order to be eligible under state continuation law, an employee must have been: (1) continuously insured under a group policy during the 3 month period preceding the termination of employment; (2) entitled to unemployment compensation benefits under Chapter 4141 of the Revised Code; (3) not covered or eligible for coverage under Medicare; or (4) not covered or eligible for coverage under other group coverage.
When does the law become effective? The law became effective on the date of enactment, February 17, 2009. However, under a transition rule, the regular premium amount may continue to be paid by the former employee for up to two months after enactment (e.g., for March and April). Thus a former employee who has already paid the entire amount of premium for their coverage is entitled to be reimbursed or credited for the amount of the overpayment by the insurance company.
Will eligible individuals who previously terminated or declined to elect group continuation coverage have another opportunity to elect group continuation coverage and receive the subsidy? No. For individuals receiving state continuation coverage there is no state equivalent extended eligibility period. In other words, only employees involuntarily terminated on or after February 17, 2009, through December 31, 2009 or those who elected continuation coverage, are eligible for the subsidy.
After the employer forwards the employee’s 35% premium payment to the insurer what happens? The insurer is required to accept the 35% payment as payment in full for continuation of the group coverage for the former employee. The insurer will claim the unpaid 65% of the premium as a credit against payroll tax owed on IRS Form 941.
What other information is the insurer likely to request from the small employer? Small employers may be asked to provide the insurer with information to verify the former employees’ eligibility under the statute. Such documentation may include: Attestation of involuntary termination, including the date of the involuntary termination (which must be during the period from February 17, 2009 to December 31, 2009), for each covered employee whose involuntary termination is the basis for eligibility for the subsidy; and proof of each former employee’s eligibility for state continuation coverage and election of state continuation coverage.
What if there is a disagreement as to whether a former employee is eligible for group continuation coverage? Former employees may contact the Department of Insurance if they believe the insurance company is not complying with state or federal group continuation coverage rules. To contact the Department of Insurance, call 1-800-686-1527.
What other agencies provide information about the COBRA subsidy for consumers and large employers? Information about the COBRA subsidy will also be available through the Department of Labor and the Department of Health and Human Services, which, along with the IRS, share responsibility for the COBRA requirements. Visit the Department of Labor Web site at http://www.dol.gov/ebsa/cobra.html for information related to COBRA eligibility and the subsidy. Benefits Advisors are also available to assist you at 1-866-444-3272. Visit the IRS to find information related to tax provisions in the American Recovery and Reinvestment Act of 2009 at http://www.irs.gov/newsroom/article/0,,id=204708,00.html.
Ohio insurance consumers with questions and concerns about their insurance can call the Department’s consumer hotline at 1-800-686-1526. Free information can also be obtained at www.insurance.ohio.gov.