On December 19, 2009, the COBRA subsidy, created by the American Recovery and Reinvestment Act of 2009 (ARRA), was extended in three ways. The initial program provided that assistance-eligible individuals, individuals who experienced a COBRA-qualifying event that is an involuntary reduction of employment from September 1, 2008 through December 31, 2009, would be permitted to pay 35 percent of the applicable COBRA premium for up to nine months. Under the extended program, (1) the COBRA premium reduction eligibility period is extended for two months until February 28, 2010, so that assistance-eligible individuals who experience an involuntary termination of employment and are eligible for COBRA prior to March 1, 2010 are now eligible for the subsidy; (2) the subsidy period is extended for an additional six months (from nine to 15 months); and (3) assistance-eligible individuals who reached the end of the subsidized premium period before December 19, 2009 will have an extension of their COBRA premium grace period to pay the reduced premium. The extended grace period ends February 17, 2010 or, if later, 30 days after notice of the extension is provided by the plan administrator. Assistance-eligible individuals who lost the subsidy and paid the full 100-percent premium in December 2009 must be given a credit or a refund for the overpayment. Plan administrators also must provide notice about these extensions to assistance-eligible individuals no later than February 17, 2010, including providing additional information to individuals who experienced a termination of employment on or after October 31, 2009 and already received a COBRA notice.
The U.S. Department of Labor (DOL) is expediting the preparation of new and revised notices on the COBRA-subsidy extension. The DOL has announced that it intends to issue a “premium assistance extension notice” that plan administrators and other entities subject to COBRA or state mini-COBRA laws will have to send by February 17, 2010. DOL also announced that it will update model notices issued as mandated under the initial ARRA legislation and create packages designed for particular groups of qualified beneficiaries that will include a comprehensive set of forms and notices. A Federal Register notice will be issued when the revised ARRA notices are available.
Rule changes effective in 2010 require self-reporting and excise tax payment for compliance problems with common health and welfare plan programs. Under new final IRS regulations, employers and certain third parties must self-report and pay excise taxes regarding failures to comply with the requirements of Code Sections 4980B (COBRA continuation coverage requirements); 4980D (group health plan requirements relating to HIPAA portability, access, renewability, and nondiscrimination rules); 4980E (requirement that employers make comparable contributions to Archer Medical Savings Accounts); and 4980G (requirement that employers make comparable contributions to health savings accounts). Prior to 2010, employers (and certain third parties) typically corrected problems as they were identified and did not pay the related excise taxes unless they were assessed by the IRS. This change is very significant. New Form 8928, “Return of Certain Excise Taxes under Chapter 43 of the Internal Revenue Code,” (available on www.irs.gov) is used for this purpose. Failure to file the form on a timely basis and pay the applicable excise taxes may result in late filing fees and interest. The excise tax for these items generally is $100 per day per affected person.
Employers should ensure that responsible human resources staff members have adequate training and compliance checklists to avoid the need to self-report the indicated problems. Periodic compliance reviews and careful monitoring of outside administrators also is essential.
Interim final regulations have been issued concerning the provisions of the Genetic Information Nondiscrimination Act (GINA) applicable to group health plans. (Treasury Decision 9474, October 7, 2009) The rules are effective generally for plan years beginning on or after December 7, 2009. The rules prohibit group health plans from:
- Increasing the group premium or contribution amounts based on genetic information
- Requesting or requiring an individual or family member to undergo a genetic test
- Requesting, requiring, or purchasing genetic information prior to or in connection with enrollment, or at any time for underwriting purposes
Practical application of these prohibitions will include, for example, not using a health risk assessment program to require an individual to provide genetic information to qualify for a reward such as a reduced premium and not requiring an individual to undergo genetic testing except in specific situations where the testing is necessary to determine medically necessary treatment. Employers also should verify that their third-party administrators are in full compliance with these rules.