1 COBRA PREMIUM ASSISTANCE EXTENDED Call Access Code to hear the audio portion Tuesday, January 12, 2010 Erwin D. Kratz and Jennifer Mammano Ward Fennemore Craig, PC (602) (520)

2 Housekeeping Call Access Code to hear the audio portion Your telephone has been muted your questions to during the webinar We will answer as many questions as we can at the end of the webinar

3 COBRA Premium Assistance ( Recap of Original Provisions) An individual is an Assistance Eligible Individual (“AEI”) if: –Eligible for COBRA at any time between September 1, 2008 and December 31, 2009 –Elects COBRA coverage –Qualifying event was involuntary termination of employment between September 1, 2008 and December 31, 2009 AEI pays 35% of COBRA premium Premium Assistance = 65%

4 COBRA Premium Assistance ( Recap of Original Provisions) Premium Assistance Ends on Earliest of: –9 months after assistance begins Initial recipients lost eligibility as of 11/30/2009 –Eligibility for Medicare –Eligibility for another group health plan –When COBRA coverage otherwise ends Notice requirements –COBRA election notice revised/supplemented to include notice of availability of premium reduction

5 COBRA Premium Assistance ( Recap of Original Provisions) Transition Issue –If Assistance Eligible Individual paid 100% of COBRA Premium for First or Second Coverage Period After Enactment Employer was required to reimburse the excess or credit the individual with the excess:

6 Extended COBRA Premium Assistance An individual is an Assistance Eligible Individual (“AEI”) if: –Eligible for COBRA related to a qualifying event occurring between September 1, 2008 and February 28, 2010 –Elects COBRA coverage –Qualifying event was an involuntary termination of employment This eliminates the old rule that both the involuntary termination and the COBRA coverage had to start before 12/31/2009 (2/28/2010)

7 Extended COBRA Premium Assistance Premium Assistance Period Extended from 9 to 15 months Retroactive Premium Payment Rights New Notice Requirements

8 Extended COBRA Premium Assistance Retroactive Premium Payment –Anyone who previously exhausted their 9 months of premium assistance and regained status as an AEI as a result of the extension gets an extension of time to pay the reduced premium. Extended payment premium period ends on later of: 30 days after receipt of notice of the extended payment period 60 days after enactment (i.e. by February 17, 2010) –Anyone who already paid the full premium and is now an AEI again is entitled to a refund or credit for the excess.

9 Extended COBRA Premium Assistance New Notice Requirements –Within 60 days after enactment (i.e. by February 17, 2010), notify the following people of the extension: Everyone who was an AEI on or after October 31, 2009; and Everyone who experienced a qualifying event consisting of termination of employment on or after October 31, 2009 and before December 19, 2009

10 Extended COBRA Premium Assistance New Notice Requirements –Notify everyone who experiences a qualifying event consisting of termination of employment on or after December 19, 2009 of the extension. Provide notice in accordance with regular COBRA notification timing requirements –Notify everyone who (i) exhausted their 9 months of eligibility for premium assistance before December 19, 2009, and (ii) regained status as an AEI as a result of the extension of their eligibility to pay premiums retroactively. Provide notice within 60 days after the date they exhausted their eligibility for premium assistance (i.e. by February 1, 2010)

11 Extended COBRA Premium Assistance To Do #1: Develop a new supplemental notice explaining the extension and eligibility to pay premiums retroactively. –Provide this supplemental notice on or before February 1, 2010 (ideally on or before Monday, January 18) to Everyone who was an AEI as of October 31, 2009; and Everyone who experienced a qualifying event on or after October 31, 2009 and already received their COBRA election notice DOL has finalized a model notice but has not posted it to its web site yet To Do #2: Revise existing COBRA qualifying event notices to account for the extension

12 Questions?

13 Additional Proposed Extensions  Senate COBRA Subsidy Extension Bill (S2730)  Introduced November 4, 2009 (referred to committee)  Would extend the subsidy to individuals who are involuntarily terminated between January 1, 2010, and June 30, 2010  Would add a reduction in hours as an event that triggers subsidy eligibility  Would increase the subsidy amount from 65% to 75%  Would extend the maximum subsidy period from 9 months to 15 months  individuals whose coverage already expired under the original time limit would only get an additional 3 months for a total of 12 months of subsidy coverage  Would terminate all subsidy eligibility on December 31, 2010 (even if the 15 month eligibility period has not otherwise terminated)

14 Additional Proposed Extensions  House COBRA Subsidy Extension Bill (H.R. 3930)  Introduced October 26, 2009 (referred to committee)  Would extend all COBRA coverage (not just subsidy period) for all individuals who became eligible due to a termination of employment or reduction of hours between April 1, 2008 and January 1, 2010 from 18 months to 24 months (and would give those who would be eligible but for the fact that their coverage had expired a new election period)  Would extend the maximum subsidy period from 9 months to 15 months  Would terminate all subsidy eligibility on December 31, 2010 (even if the 15 month eligibility period has not otherwise terminated)

15 Additional Proposed Extensions  House COBRA Subsidy Extension Bill (H.R. 3966)  Introduced October 29, 2009 (referred to committee)  Would extend the subsidy to individuals who are involuntarily terminated between January 1, 2010, and June 30, 2010