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Next Steps towards COBRA Compliance under the ARRA

As a Meritain Health COBRA services client, we would like to provide you with an update regarding ramifications related to the recent American Recovery and Reinvestment Act (ARRA) that was signed by President Obama on February 17, 2009.

As new information is released regarding the impact of the ARRA, and as our work progresses, we will provide you with updates.

Deadline:

• A deadline of April 18, 2009 has been established by the Department of Labor (DOL) for the mailing of Second Chance election notices, and for sending information regarding the subsidy to existing Qualified Beneficiaries. As per our recent communication announcing the impact of the legislation, Meritain Health has established internal business groups dedicated to ensuring compliance prior to the April 18 deadline.

Program clarifications:

• Definition of Involuntary Termination. We have received many inquiries on the definition of "involuntary termination." While the law did not provide a specific definition of involuntary termination, it is being interpreted widely to mean any involuntary termination (i.e. he/she did not voluntarily resign or quit), other than for gross misconduct. This would include any employee who lost employment through a lay-off, or who was fired, forced out, etc.
• Dental & Vision Only Clients. Initially, we communicated that ARRA would not apply to dental and vision only clients, but we have since learned that it does. If you offer a stand-alone dental and/or vision plan, you will also have to comply with these new rules.
• Model Notices. Model notices are communication templates that are being developed by the DOL for use by employers in communicating with their plan members. The model notices will outline the premium assistance eligibility rules. While employers are free to follow their preferred communications with their employee populations, the use of the DOL model notices ensures consistency in communications regarding the program as well as assurance that the changes are being communicated within legal guidelines. Utilization of the DOL model notices will reduce the risk of employers receiving fines or penalties. Model notices are to be issued by the DOL on March 18, 2009. The DOL has informally indicated that they expect to meet this deadline; however, Meritain Health will offer a custom communication in the case that the DOL does not meet their deadline. We will alert you as soon as the DOL model notices are available.
• Plan Amendments. Plan amendments are not required.
• Last Known Address. COBRA regulations state that the last known address should be used, which is what Meritain Health has planned on doing unless a group has updated information and provides that to us. If you are aware of a change in address for one of your former employees, please let us know by April 8, 2009.
• Reports. Reports will be provided to clients to support the documentation requirements outlined in ARRA in order to claim reimbursement for the subsidy. The IRS has put together a very detailed Q&A for employers that may answer many of your questions regarding the subsidy and how to go about claiming it.
• State Continuation Subsidies. Generally, church employers, and employers that have less than 20 employees (as calculated under COBRA), are not subject to COBRA. However, these employers might have health plans subject to State continuation rules, and certain continuees under those plans qualify for the federal subsidy (although those plans are not subject to the "second chance" notice rules). Employers not subject to COBRA but with plans subject to State continuation rules should consult with their insurance carriers and their counsel about this.

For a general overview of ARRA, please refer to our Special Compliance Alert that was sent out on February 17, 2009. Please note that we have updated the To Whom Does the Act apply section to clarify the updated information provided.

Please keep in mind, that because the law failed to specify several key items, this law is a moving target and we continue to learn more information weekly. As stated, we will be providing you with regular updates and information, however we do encourage you to contact either your Meritain Health representative or visit the DOL Web site at http://www.dol.gov.

Meritain Health is here to support you throughout the ARRA role out and beyond. Our size, strength and national presence allow us to provide you with tools and resources unique to the marketplace. Should you have any questions, please do not hesitate to contact us immediately.