COBRA Information for Ohio Employers
OVERVIEW
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) requires many group health insurance plans to offer employees & their covered dependents the opportunity to continue their group health plan coverage for at least 18 months after the occurrence of certain “qualifying events” that otherwise would have terminated their coverage. State law requires 12 months for smaller employers.
The COBRA provisions of the American Recovery and Reinvestment Act of 2009, which was signed into law by the President on February 17, 2009, provides for a 65% subsidy of COBRA premiums for employees who were involuntarily terminated on or after September 1, 2008 and prior to March 31, 2010. They also must not be eligible for other group coverage or Medicare. The new law will have a substantial impact on employers’ ongoing obligations under COBRA.
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Small employers from 2-19 employees in the previous year are subject to the Ohio Continuation Coverage guidelines.
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Large employers with 20 or more employees are subject to the federal COBRA guidelines.
SMALL BUSINESS EMPLOYERS IMPACT
Ohioans under state continuation are now eligible for up to 12 months of the 65% federal subsidy. Also, former employees no-longer must be eligible for unemployment but only must have been terminated unless it was for gross misconduct.
WHAT SMALL BUSINESS EMPLOYERS MUST DO
When the employee is terminated, the employer must send the new model notification for Ohio Continuation, link below. If a former employee is currently on Ohio Continuation, then the insurer is required to send notices of subsidy eligibility, link below.
Ex-employees who previously been recieving the subsidy at the end of 2009 must now be sent a notice of Extension of Benefits explaining the extension of 9 months of available subsidy to 12 months.
COVERAGE PAYMENT
The insurer is required to accept the 35 percent payment as payment in full for continuation of the group coverage for the former employee. The insurer will claim the unpaid 65 percent of the premium as a credit against payroll tax owed on IRS Form 941. Members enrolled in the COSE health insurance program powered by Medical Mutual of Ohio must submit the premium remittance form, link below.
Note: Form must be submitted with each invoice where partial payment is made.
MORE SMALL BUSINESS EMPLOYER QUESTIONS
The Ohio Department of Insurance has created small employer guidelines. Ohio Department of Insurance Small Employers FAQ Also, if you have any questions, please do not hesitate to call COSE at (216) 592-2222, select option one.
LARGE BUSINESS EMPLOYERS IMPACT
Individuals who are eligible for COBRA continuation health coverage may receive a subsidy for 65 percent of the premium for up to 15 months. These individuals are required to pay only 35 percent of the premium. The employer may recover the subsidy provided to assistance-eligible individuals by taking the subsidy amount as a credit on its quarterly employment tax return. The employer may provide the subsidy — and take the credit on its employment tax return — only after it has received the 35 percent premium payment from the individual.
WHAT LARGE EMPLOYERS MUST DO
Plans and issuers are required to notify qualified beneficiaries regarding the premium reduction and other information about their rights under ARRA as follows:
- A general notice to all qualified beneficiaries, whether they are currently enrolled in COBRA coverage or not, who have a qualifying event during the period from September 1, 2008 through March 31, 2010. This notice may be provided separately or with the COBRA election notice following a COBRA qualifying event.
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Model Notice from the Department of Labor
Ex-employees who previously been recieving the subsidy at the end of 2009 must now be sent a notice of Extension of Benefits explaining the extension of 9 months of available subsidy to 12 months.
COVERAGE PAYMENT
The initial 35% 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. Payment is considered to be made on the date it is sent to the plan.
The employer (or other responsible entity) may recover the 65% subsidy provided to Assistance Eligible Individuals 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 website.
MORE QUESTIONS?
The Ohio Department of Insurance has created a Large Employer FAQ.
The U.S. Department of Labor has also created a Large Employer FAQ.
If you use CERIDIAN as your third party administrator, please contact them at 800-488-8757 or by clicking HERE.
Also, if you have any questions, please do not hesitate to call COSE at (216) 592-2222, select option one.
OTHER IMPORTANT DOCUMENTS FROM COSE REGARDING COBRA
COBRA Fact Sheet from Department of Labor
Communication from Medical Mutual to Group Officials Regarding COBRA Subsidy
Model Notices Provided by Department of Labor and Ohio Department of Insurance
Small Group State Continuation Billing Instructions from MMO
Department of Labor Website
IRS Website
Ohio Department of Insurance Website