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State of Oregon’s Insurance Division Clarifies Continuation Coverage for Small Employers
With all of the press on the American Recovery and Reinvestment Act (ARRA) as well as the passage of Oregon’s House Bill 2433 (“HB2433”) in the past several months, it’s hard to believe there is still more information to share. But there is and it comes in the form of clarity rather than new news. As you know, both pieces of legislation changed the rules of healthcare continuation coverage for large employers (20 or more employees) and small employers (19 or fewer employees). The changes include a temporary reduction in the cost of continuation coverage for Assistant Eligible Individuals* (AEI) and an extension to Oregon continuation coverage from six (6) months to a maximum of nine (9) months (extension impacts small employers only).
Recently, Oregon’s Insurance Division provided additional clarity on the changes to continuation coverage. Following is an overview of the Oregon continuation coverage provisions for small employers. Included are the basics of continuation coverage as well as the changes introduced by HB2433. Additional information about HB2433 is available through the Insurance Division website at
Oregon Continuation Coverage ~ Small Employers:- Employers are required to provide Continuation Coverage Election Forms to eligible employees upon termination or reduction of hours
- Continuation coverage is medical or health insurance coverage for a period of up to nine (9) months following termination of employment or reduction in hours
- Continuation coverage does not include dental or vision coverage if these plans were part of an unbundled benefit program
- Continuation coverage ends before the nine (9) month maximum if continuation premiums are not paid on time; employee becomes covered under another group health plan; employee becomes entitled to Medicare benefits; a child no longer qualifies as an eligible dependent (due to age, marriage, etc.); the employer discontinues the health plan.
- Employers collect continuation premiums and then pay the health insurance provider.
- AEIs pay 35% of the cost of continuation coverage up for up nine (9) months; the insurance carrier, not the employer, pays the remaining 65% of cost and is eligible for a tax credit (large employers are subject to COBRA provisions and are required to pay the 65% subsidy)
- AEIs include individuals that were involuntarily terminated for reasons other than gross misconduct between September 1, 2008 and December 31, 2009.
- Dependents who no longer qualify for coverage under a group policy (because of age, marriage, loss of student status) are not eligible for continuation coverage.
The Stimulus Bill and COBRA Benefits
How the COBRA Premium Subsidy will Help More Get COBRA BenefitsBy Bobbie Sage, About.com
The American Recovery and Reinvestment Act, signed into law by President Obama on February 17, 2009, is a $787 billion stimulus bill. One of the many provisions of the bill is to directly provide relief to millions on the COBRA plan or ex-employees who need COBRA coverage. This "COBRA stimulus plan" will provide enrollees a COBRA premium subsidy along with providing COBRA benefits to ex-employees who denied coverage.
Before we learn more about the COBRA stimulus plan, let's start with explaining a bit about COBRA. The Consolidated Omnibus Budget Reconciliation Act, otherwise known as COBRA, was put into law in 1985 to help workers who lost their job continue their health insurance. Basically, it gave the ex-employee the ability to continue their employer sponsored health insurance plan. The insurance stayed the same but the entire premium was to be paid by the ex-employee.
The First Part of The COBRA Stimulus Plan: Reduced Premiums
The COBRA stimulus plan basically has two parts. In the first part, The COBRA stimulus plan will be able to step in and help struggling families trying to pay their COBRA benefits. People who are currently enrolled in the COBRA plan will get a 65% reduction in their premium costs. This will be a huge savings to many families struggling to keep their COBRA benefits.
Part 2: The Ability to Re-Enroll into COBRA
The second part of the COBRA stimulus plan will provide recently unemployed people the ability to re-enroll into the COBRA plan, even if they had denied coverage in the past. This will help a great amount of people who choose not to continue their health insurance through COBRA because they just could not afford it.
9 Key Details about the COBRA Stimulus Plan
- Valid for people who were involuntarily terminated between September 1, 2008 and December 31, 2009
- To be eligible annual income cannot exceed $125,000 for a single person and $250,000 for a couples.
- 65% of existing COBRA premiums will be subsidized by the U.S. Treasury Department.
- Subsidies will be available for up to 9 months.
- If you declined COBRA coverage after September 1, 2008 you will have the option to re-enroll into COBRA with the above subsides.
- Notices of the COBRA subsidies and re-enrollment information will be sent from the COBRA administrator (usually your previous employer).
- Subsidies will be paid, via a refundable tax credit, directly to the COBRA administrators.
- Subsidies will terminate if the enrollee acquires a new health insurance plan through another employer or is eligible for Medicare.
- Subsidies will only apply to COBRA premiums paid after the effective date of February 17, 2009 and there will be no refund of premiums prior to this date.