labor lawAdivision of labor law center

On April 2, 2009 the U.S. Department of Labor issued additional regulations regarding the COBRA Premium Reduction under ARRA, the American Recovery and Reinvestment Act of 2009.

 

Under the ARRA, employees who were involuntarily terminated between September 1, 2008 and December 31, 2009 can keep their group health insurance and pay just 35% of the usual premium. The remaining 65% of the health insurance premium is paid by the federal government, through a credit on the employer’s quarterly payroll taxes.

 

Because of the new program, terminated workers who initially declined COBRA now have an opportunity to sign up for it, during the Special COBRA Election Opportunity. Each employer or COBRA administrator must inform eligible workers by April 17, 2009 of the opportunity to elect COBRA coverage at the subsidized rate. The Special COBRA Election Opportunity period began on February 17, 2009 and ends 60 days after the plan provides the required notice.

 

The COBRA Premium Reduction is in place for 9 months. During that time, employees pay just 35% of the total COBRA premium.

 

The COBRA Premium Reduction does not extend COBRA coverage for a longer period – in most cases, the employee is eligible only for coverage for 18 months.

 

A number of states have extended COBRA-style coverage to employers with fewer than 20 workers on group health insurance. While the COBRA subsidy does apply to these smaller “state plan” employers, the Special Election Opportunity does not. Employees who are terminated today can opt for COBRA at the reduced rate. However, employees who have already declined COBRA under a state plan have no opportunity to re-enroll.

 

Employees who are denied COBRA Premium Reduction may request an expedited review by the U.S. Department of Labor. This applies to employees whose COBRA subsidy is denied by the health insurance plan, the employer or the insurer. The U.S. Department of Labor must make a determination within 15 business days of the receipt of a completed request for review. The official application will be available at http://www.dol.gov/ebsa/cobra.html as soon as it is developed.

 

Allowing employees to switch benefit options under the COBRA Premium Reduction is optional. If an employer offers additional coverage options to active employees, the employer may choose to allow COBRA-eligible individuals to switch coverage options. However, allowing the employee to switch coverage options is at the employer’s discretion – it is not a requirement. In addition, if the employee switches to an option with a more expensive premium, the individual loses edibility for the premium reduction.

 

In addition, individuals eligible for COBRA subsidies cannot switch to a healthcare option that provides limited coverage only. For example, they cannot switch to a program that offers only dental, vision, or a flexible spending account. Nor can the individual choose coverage that provides treatment in an on-site facility maintained by the employer.

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1. Posted by: Denise

   I read the above. It did answer my question regarding does it cover dental insurance only?

2. Posted by: Amelia

   Hi Denise! Usually COBRA does not cover dental insurance only. COBRA does not change the health care coverage that an employer offers. It just allows ex-employees to extend that coverage while they are no longer employed, for a price.
   For the majority of employers who offer it, dental insurance is available only to employees who also have medical health insurance coverage. In other words, an employee can opt for medical coverage, or for medical and dental coverage, but cannot opt for dental coverage alone. If the worker is eligible for COBRA, this does not change. The worker would still not be able to opt for dental coverage alone…because that is not a type of coverage offered by the employer.
   However, if current employees can opt for dental coverage without medical coverage, then workers on COBRA must be offer the same benefit. This situation is very rare, though. HTH, and thanks for reading the blogs!~ Amelia