The House of Representative and Senate overwhelmingly approved legislation that would
extend the federal subsidy of COBRA health insurance premiums for employees who are
Embedded in H>R. 3326 a measure appropriating funds for the Department of Defense
the nine month 65% premium subsidy would be extended by six months to a total of 15
months. It would apply to those who lose their jobs through February 28, 2010. Under
current law, employees who lose their jobs after December 31, 2009 are ineligible for the
The measure approved in the House on 395-34 votes, also would provide an additional
six months of subsidized coverage for beneficiaries who nine month COBRA premium
subsidy has run out.
In addition, the legislation would give beneficiaries who subsidy ran out and who did not
pay the full premium a second chance to opt for coverage. For example, a beneficiary
who nine months of subsidized coverage ran out November 30, 2009 and who did not pay
the regular unsubsidized December premium could pay the 35% premium share in
January and receive coverage for December.
The legislation would require employers to notify current COBRA beneficiaries and
future beneficiaries of the new 15-month premium subsidy. Sample notices will be sent
for distribution after the President signs the bill.
The House also is expected to take up another appropriations bill, H>R. 2847,with a
provision that would extend the premium subsidy to those who lose their jobs through
June 30, 2010.
The Department of Defense Bill, Washington observers say, is on “fast-track”
consideration and could be quickly approved by the Senate.
FOR VIOLATIONS OF COBRA, HIPAA PORTABILITY, OTHER GROUP
HEALTH PLAN MANDATES AND FINAL REGULATIONS FOR HAS
COMPARABLE EMPLOYER CONTRIBUTIONS
Article by Christine L. Keller and Jenifer A. Cromwell,
Failing to company with various federal group health plan mandates, including COBRA
and HIPAA probably, just got riskier and costlier for employers. Since the date of
enactment of COBRA, HIPAA Portability and other federal mandates applicable to group
health plans, the Internal Revenue Code has provided that employers are liable for excise
taxes for failure to comply with such provisions.
However, there had never been a method of self reporting the excise tax, and the IRS had
to historically imposed these excise taxes as part of an audit, With the publication of final
regulations on excise tax reporting, effective January 1, 2010, employers who sponsor
group health plans now will be required to report and pay excise taxes for failing to
satisfy certain federal group health plan mandates, unless timely corrected.
In addition, excise tax reporting is required if comparable employer contribution rules are
not satisfied for health saving accounts (HAS) and Archer medical savings accounts
(MSA). 74 Fed. Reg. 45994 (September 8, 2009). Failure to file the excise tax return and
pay the excise tax on or before the required due date will result, under Internal Revenue
code section 6651, in penalties and related interest unless the failure to timely file or pay
is due to reasonable cause and not to willful neglect.
Employers with 20 or more employees should consider using a COBRA administrator to
handle compliance on all terminate employee to avoid a risk of penalties. Small groups
also must comply with the extension provided the state in which they are headquartered
has a state continuation program. New York, New Jersey and recently Pennsylvania have
state continuation laws for groups not subject to Federal COBRA rules.