Federal Regulations
The Consolidated Omnibus Budget Reconciliation Act (COBRA)
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated. COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 employees on more than 50% of its typical business days in the previous calendar year. Both full-time and part-time employees are counted to determine whether a plan is subject to COBRA, with each part-time employee counting as a fraction of a full-time employee.
COBRA continuation is available upon the occurrence of a qualifying event that would cause an individual to lose his or her health care coverage. The type of qualifying event will determine who the qualified beneficiaries are and the amount of time that a plan must offer the health coverage under COBRA. COBRA beneficiaries are typically eligible for a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work. Certain qualifying events, or a second qualifying event during the initial period of coverage, may permit a beneficiary to receive a maximum of 36 months of coverage. Employers or health plan administrators must provide an initial general notice to employees that are entitled to COBRA benefits to notify them of their rights under COBRA.
Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA coverage. Qualified beneficiaries must be given at least 60 days for the election. This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided by the employer or plan administrator. The election notice must be provided within 14 days after the plan administrator receives notice that a qualifying event has occurred.
If COBRA is elected, coverage should begin on the date that coverage would otherwise have been lost, so that there is no lapse in benefits. The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event. Premiums for successive periods of coverage are due on the date stated in the plan with a minimum 30 day grace period for payments.
COBRA premiums cannot exceed 102% of the cost of the plan for active employees. For qualified beneficiaries receiving the 11 month disability extension of coverage, the premium for those additional months may be increased to 150% of the plan's total cost of coverage.
Additional information about COBRA can be found on the Department of Labor website.
The American Recovery and Reinvestment Act of 2009 (ARRA)
The American Recovery and Reinvestment Act of 2009 (ARRA) temporarily reduces the premium for COBRA coverage for eligible individuals. An eligible individual is someone who had a loss of coverage which was due to their own or a family member’s involuntary termination of employment that occurred from September 1, 2008 through December 31, 2009.
Eligible individuals would only be required to pay 35% of the full COBRA premiums under their plans for up to 9 months. The employer may recover the remaining 65% of the premium by taking the subsidy amount as a credit on its IRS Form 941 quarterly employment tax return. For more information on the Form 941 credit and the tax provisions in ARRA, visit the IRS web site.
If the assistance eligible individual becomes eligible for other group health coverage (such as through a new employer’s plan or a spouse's plan) or Medicare, he or she is no longer eligible for the premium reduction.
Additional information about ARRA can be found on the Department of Labor website.
The Department of Defense Appropriations Act of 2010 (2010 DOD Act)
On December 19, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was amended by the Department of Defense Appropriations Act of 2010 (2010 DOD Act). The 2010 DOD Act allows for individuals with a qualifying event that results in an involuntary termination of employment to receive a premium reduction for an additional 6 months, to total a maximum of 15 months. In addition, the eligibility period was extended for two months to include individuals who were involuntarily terminated sometime between September 1, 2008 and February 28, 2010.
Notification of these changes must be provided by February 17, 2010 (60 days after the date of enactment) to the following:
* Individuals considered to be assistance eligible individuals as of October 31, 2009;
* Individuals with a COBRA qualifying event of termination of employment (voluntary or involuntary) on or after October 31, 2009; and
* Individuals in a transition period, which is defined as beginning immediately after the end of the original nine month premium reduction and before the recent amendments of the 2010 DOD Act.
In addition, individuals who have reached the end of their original nine month premium reduction period will have until February 17, 2010 (or 30 days after the notice of extension is provided to them, whichever is later) to pay their reduced premiums based upon the extension.
If at any time the assistance eligible individual becomes eligible for other group health coverage (such as through a new employer’s plan or a spouse's plan) or Medicare, he or she is no longer eligible for the premium reduction.
The Temporary Extension Act of 2010 (TEA)
On March 2, 2010, the American Recovery and Reinvestment Act of 2009 (ARRA) was amended by the Temporary Extension Act of 2010 (TEA) extending the eligibility period to qualify for premium assistance to March 31, 2010. Individuals with a COBRA qualifying event that results in an employee’s involuntary termination of employment during the period beginning September 1, 2008 through March 31, 2010 may be eligible for the premium reduction for up to 15 months.
In addition, TEA adds the provision to permit premium assistance for employees who were involuntarily terminated on or after March 2, 2010 and no later than March 31, 2010, as a result of a reduction of hours from September 1, 2008 through March 31, 2010. This expansion includes a second election opportunity for individuals who experienced a reduction of hours followed by an involuntary termination if they did not elect COBRA continuation coverage when it was first offered or if they elected but subsequently discontinued COBRA.
ARRA, as amended by TEA, provides that the 15 month premium reduction period begins on the first day of the first period of coverage for which an individual is “assistance eligible.” Only individuals who have additional periods of COBRA (or state continuation) coverage remaining after they become assistance eligible are entitled to the premium reduction. If at any time the assistance eligible individual becomes eligible for other group health coverage (such as through a new employer’s plan or a spouse's plan) or Medicare, he or she is no longer eligible for the premium reduction.
The information above was taken directly from the Department of Labor website.
The Mental Health Parity Act of 1996 (MHPA)
The Mental Health Parity Act of 1996 (MHPA) is a federal law that was enacted to prevent large group health plans from placing annual or lifetime dollar limits on mental health benefits that are less favorable than annual or lifetime dollar limits for medical and surgical benefits offered under the plan.
There are three exceptions to this law:
* MHPA requirements do not apply to small employers who have between 2 and 50 employees;
* Large group health plans that can demonstrate that compliance with MHPA increases their cost by at least one percent may claim an exemption from MHPA; and
* A nonfederal government employer that provides self-funded group health plan coverage to its employees (coverage that is not provided through an insurer) may elect to opt-out from the requirements of MHPA.
For more information, go to the Centers for Medicare and Medicaid Services website.
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
On October 3, 2008, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was enacted to keep the provisions of the 1996 Mental Health Parity Act intact and further expand it to include substance abuse disorder benefits to provide true parity between mental health and substance abuse (MH/SA) benefits and medical/surgical benefits. Key changes made by MHPAEA include the following:
* If a group health plan includes medical/surgical benefits and mental health benefits, the financial requirements (e.g., deductibles and co-payments) and treatment limitations (e.g., number of visits or days of coverage) that apply to mental health benefits must be no more restrictive than the financial requirements or treatment limitations that apply to medical/surgical benefits;
* If a group health plan includes medical/surgical benefits and substance use disorder benefits, the financial requirements and treatment limitations that apply to substance use disorder benefits must be no more restrictive than the financial requirements or treatment limitations that apply to medical/surgical benefits;
* If a group health plan includes medical/surgical benefits and mental health benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network mental health benefits;
* If a group health plan includes medical/surgical benefits and substance use disorder benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network substance use disorder benefits;
* The parity requirements for the existing law (regarding annual and lifetime dollar limits) will continue and will be extended to substance use disorder benefits.
For more information, go to the Centers for Medicare and Medicaid Services website.
Medical Leave for Post-Secondary Students (Michelle’s Law)
Effective October 9th, 2009, the Employee Retirement Income Security Act of 1974 (ERISA) was amended to ensure that dependent students who take a medically necessary leave of absence do not lose health insurance coverage. “Michelle’s Law” permits students attending post-secondary institutions (i.e., colleges, universities, technical and specialized schools) to retain their current medical coverage for up to one year while on a medically necessary leave of absence. This legislation requires that students be provided the same coverage that would be in effect if they did not take a leave of absence.
Click here for the amended law.
The Children's Health Insurance Program Reauthorization Act (CHIPRA)
Effective April 1, 2009, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) states that group health plans and group health insurance issuers must permit employees and their dependents who are eligible for a group health plan to enroll in the plan upon:
* Losing eligibility for coverage under a State Medicaid or CHIP program, or
* Becoming eligible for State premium assistance under Medicaid or CHIP.
The employee or dependent must request coverage within 60 days of being terminated from Medicaid or CHIP coverage or within 60 days of being determined to be eligible for premium assistance.
Employers that maintain a group health plan in a State that provides premium assistance under Medicaid or CHIP must notify all employees, regardless of enrollment status, of potential opportunities for premium assistance in the State in which the employee resides. Such notice must be provided by the date that is the later of:
* The first day of the first plan year after February 4, 2010, or
* May 1, 2010.
Accordingly, for plan years beginning between February 4, 2010 through April 30, 2010, the CHIP notice must be provided by May 1, 2010. For employers whose next plan year begins on or after May 1, 2010, the CHIP notice must be provided by the first day of the next plan year (January 1, 2011 for calendar year plans).
In addition, this notice must be provided to employees on an annual basis, no later than the first day of the each new plan year.
Example
An employer maintains a group health plan with a plan year beginning January 1, 2011. The plan has an annual open enrollment period from October 15, 2010 through November 30, 2010, with coverage effective January 1, 2011. Open enrollment packets are to be distributed to all employees on October 1, 2010.
The employer may distribute the CHIP notice as a separate, prominent document in the open season packet on October 1, 2010, so long as it is provided no later than January 1, 2011.
The model CHIP notice can be found here.
The information above was taken directly from the Department of Labor website and the Federal Register notice.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated. COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 employees on more than 50% of its typical business days in the previous calendar year. Both full-time and part-time employees are counted to determine whether a plan is subject to COBRA, with each part-time employee counting as a fraction of a full-time employee.
COBRA continuation is available upon the occurrence of a qualifying event that would cause an individual to lose his or her health care coverage. The type of qualifying event will determine who the qualified beneficiaries are and the amount of time that a plan must offer the health coverage under COBRA. COBRA beneficiaries are typically eligible for a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work. Certain qualifying events, or a second qualifying event during the initial period of coverage, may permit a beneficiary to receive a maximum of 36 months of coverage. Employers or health plan administrators must provide an initial general notice to employees that are entitled to COBRA benefits to notify them of their rights under COBRA.
Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA coverage. Qualified beneficiaries must be given at least 60 days for the election. This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided by the employer or plan administrator. The election notice must be provided within 14 days after the plan administrator receives notice that a qualifying event has occurred.
If COBRA is elected, coverage should begin on the date that coverage would otherwise have been lost, so that there is no lapse in benefits. The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event. Premiums for successive periods of coverage are due on the date stated in the plan with a minimum 30 day grace period for payments.
COBRA premiums cannot exceed 102% of the cost of the plan for active employees. For qualified beneficiaries receiving the 11 month disability extension of coverage, the premium for those additional months may be increased to 150% of the plan's total cost of coverage.
Additional information about COBRA can be found on the Department of Labor website.
The American Recovery and Reinvestment Act of 2009 (ARRA)
The American Recovery and Reinvestment Act of 2009 (ARRA) temporarily reduces the premium for COBRA coverage for eligible individuals. An eligible individual is someone who had a loss of coverage which was due to their own or a family member’s involuntary termination of employment that occurred from September 1, 2008 through December 31, 2009.
Eligible individuals would only be required to pay 35% of the full COBRA premiums under their plans for up to 9 months. The employer may recover the remaining 65% of the premium by taking the subsidy amount as a credit on its IRS Form 941 quarterly employment tax return. For more information on the Form 941 credit and the tax provisions in ARRA, visit the IRS web site.
If the assistance eligible individual becomes eligible for other group health coverage (such as through a new employer’s plan or a spouse's plan) or Medicare, he or she is no longer eligible for the premium reduction.
Additional information about ARRA can be found on the Department of Labor website.
The Department of Defense Appropriations Act of 2010 (2010 DOD Act)
On December 19, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was amended by the Department of Defense Appropriations Act of 2010 (2010 DOD Act). The 2010 DOD Act allows for individuals with a qualifying event that results in an involuntary termination of employment to receive a premium reduction for an additional 6 months, to total a maximum of 15 months. In addition, the eligibility period was extended for two months to include individuals who were involuntarily terminated sometime between September 1, 2008 and February 28, 2010.
Notification of these changes must be provided by February 17, 2010 (60 days after the date of enactment) to the following:
* Individuals considered to be assistance eligible individuals as of October 31, 2009;
* Individuals with a COBRA qualifying event of termination of employment (voluntary or involuntary) on or after October 31, 2009; and
* Individuals in a transition period, which is defined as beginning immediately after the end of the original nine month premium reduction and before the recent amendments of the 2010 DOD Act.
In addition, individuals who have reached the end of their original nine month premium reduction period will have until February 17, 2010 (or 30 days after the notice of extension is provided to them, whichever is later) to pay their reduced premiums based upon the extension.
If at any time the assistance eligible individual becomes eligible for other group health coverage (such as through a new employer’s plan or a spouse's plan) or Medicare, he or she is no longer eligible for the premium reduction.
The Temporary Extension Act of 2010 (TEA)
On March 2, 2010, the American Recovery and Reinvestment Act of 2009 (ARRA) was amended by the Temporary Extension Act of 2010 (TEA) extending the eligibility period to qualify for premium assistance to March 31, 2010. Individuals with a COBRA qualifying event that results in an employee’s involuntary termination of employment during the period beginning September 1, 2008 through March 31, 2010 may be eligible for the premium reduction for up to 15 months.
In addition, TEA adds the provision to permit premium assistance for employees who were involuntarily terminated on or after March 2, 2010 and no later than March 31, 2010, as a result of a reduction of hours from September 1, 2008 through March 31, 2010. This expansion includes a second election opportunity for individuals who experienced a reduction of hours followed by an involuntary termination if they did not elect COBRA continuation coverage when it was first offered or if they elected but subsequently discontinued COBRA.
ARRA, as amended by TEA, provides that the 15 month premium reduction period begins on the first day of the first period of coverage for which an individual is “assistance eligible.” Only individuals who have additional periods of COBRA (or state continuation) coverage remaining after they become assistance eligible are entitled to the premium reduction. If at any time the assistance eligible individual becomes eligible for other group health coverage (such as through a new employer’s plan or a spouse's plan) or Medicare, he or she is no longer eligible for the premium reduction.
The information above was taken directly from the Department of Labor website.
The Mental Health Parity Act of 1996 (MHPA)
The Mental Health Parity Act of 1996 (MHPA) is a federal law that was enacted to prevent large group health plans from placing annual or lifetime dollar limits on mental health benefits that are less favorable than annual or lifetime dollar limits for medical and surgical benefits offered under the plan.
There are three exceptions to this law:
* MHPA requirements do not apply to small employers who have between 2 and 50 employees;
* Large group health plans that can demonstrate that compliance with MHPA increases their cost by at least one percent may claim an exemption from MHPA; and
* A nonfederal government employer that provides self-funded group health plan coverage to its employees (coverage that is not provided through an insurer) may elect to opt-out from the requirements of MHPA.
For more information, go to the Centers for Medicare and Medicaid Services website.
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
On October 3, 2008, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was enacted to keep the provisions of the 1996 Mental Health Parity Act intact and further expand it to include substance abuse disorder benefits to provide true parity between mental health and substance abuse (MH/SA) benefits and medical/surgical benefits. Key changes made by MHPAEA include the following:
* If a group health plan includes medical/surgical benefits and mental health benefits, the financial requirements (e.g., deductibles and co-payments) and treatment limitations (e.g., number of visits or days of coverage) that apply to mental health benefits must be no more restrictive than the financial requirements or treatment limitations that apply to medical/surgical benefits;
* If a group health plan includes medical/surgical benefits and substance use disorder benefits, the financial requirements and treatment limitations that apply to substance use disorder benefits must be no more restrictive than the financial requirements or treatment limitations that apply to medical/surgical benefits;
* If a group health plan includes medical/surgical benefits and mental health benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network mental health benefits;
* If a group health plan includes medical/surgical benefits and substance use disorder benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network substance use disorder benefits;
* The parity requirements for the existing law (regarding annual and lifetime dollar limits) will continue and will be extended to substance use disorder benefits.
For more information, go to the Centers for Medicare and Medicaid Services website.
Medical Leave for Post-Secondary Students (Michelle’s Law)
Effective October 9th, 2009, the Employee Retirement Income Security Act of 1974 (ERISA) was amended to ensure that dependent students who take a medically necessary leave of absence do not lose health insurance coverage. “Michelle’s Law” permits students attending post-secondary institutions (i.e., colleges, universities, technical and specialized schools) to retain their current medical coverage for up to one year while on a medically necessary leave of absence. This legislation requires that students be provided the same coverage that would be in effect if they did not take a leave of absence.
Click here for the amended law.
The Children's Health Insurance Program Reauthorization Act (CHIPRA)
Effective April 1, 2009, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) states that group health plans and group health insurance issuers must permit employees and their dependents who are eligible for a group health plan to enroll in the plan upon:
* Losing eligibility for coverage under a State Medicaid or CHIP program, or
* Becoming eligible for State premium assistance under Medicaid or CHIP.
The employee or dependent must request coverage within 60 days of being terminated from Medicaid or CHIP coverage or within 60 days of being determined to be eligible for premium assistance.
Employers that maintain a group health plan in a State that provides premium assistance under Medicaid or CHIP must notify all employees, regardless of enrollment status, of potential opportunities for premium assistance in the State in which the employee resides. Such notice must be provided by the date that is the later of:
* The first day of the first plan year after February 4, 2010, or
* May 1, 2010.
Accordingly, for plan years beginning between February 4, 2010 through April 30, 2010, the CHIP notice must be provided by May 1, 2010. For employers whose next plan year begins on or after May 1, 2010, the CHIP notice must be provided by the first day of the next plan year (January 1, 2011 for calendar year plans).
In addition, this notice must be provided to employees on an annual basis, no later than the first day of the each new plan year.
Example
An employer maintains a group health plan with a plan year beginning January 1, 2011. The plan has an annual open enrollment period from October 15, 2010 through November 30, 2010, with coverage effective January 1, 2011. Open enrollment packets are to be distributed to all employees on October 1, 2010.
The employer may distribute the CHIP notice as a separate, prominent document in the open season packet on October 1, 2010, so long as it is provided no later than January 1, 2011.
The model CHIP notice can be found here.
The information above was taken directly from the Department of Labor website and the Federal Register notice.
