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COBRA Consolidated Omnibus Budget Reconciliation Act Amended by: The American Recovery & Reinvestment Act 0f 2009. Presented by: Richard Herzberg Executive Vice President TFA Benefits. COBRA The American Recovery & Reinvestment Act of 2009. Premium Assistance

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Cobra consolidated omnibus budget reconciliation act amended by

COBRA

Consolidated Omnibus Budget Reconciliation Act

Amended by:

The American Recovery & Reinvestment Act 0f 2009

Presented by:

Richard Herzberg

Executive Vice President

TFA Benefits


Cobra the american recovery reinvestment act of 2009
COBRA The American Recovery & Reinvestment Act of 2009

  • Premium Assistance

    • Assistance Eligible Individuals (AEI) who pay 35% of COBRA premium are treated as having paid the full COBRA premium

      • The 35% cannot be paid by the Employer

    • The Federal government will subsidize the remaining 65% of COBRA premium

    • Premium assistance available for up to 9 months


Cobra the american recovery reinvestment act of 20091
COBRA The American Recovery & Reinvestment Act of 2009

  • Subsidy

    • The 65% employer payment is reimbursed from the employer’s liability to deposit payroll taxes and federal income taxes withheld from employees’ compensation

      • Credit on its IRS Form 941 quarterly employment tax return

      • Credit can be withheld from deposit and reconciled on quarterly 941


Cobra the american recovery reinvestment act of 20092
COBRA The American Recovery & Reinvestment Act of 2009

  • Who is an Assistance Eligible Individual?

    • Eligible for COBRA between Sept 1, 08 – Dec 31, 09

    • Elects COBRA

      • When originally offered

      • Special election period (new election under ARRA)

      • Must Be - COBRA eligible due to involuntary termination

        • Other than gross misconduct

    • AEI may be a covered employee, spouse or dependent child if qualified by reason of employee’s involuntary termination


Cobra the american recovery reinvestment act of 20093
COBRA The American Recovery & Reinvestment Act of 2009

  • Special Election Period

    • An employee who involuntary lost coverage between September 08 and now who did not accept COBRA when originally offered has a new special election period

      • The special election period is 60 days from the date the plan administrator provides the former employee (spouse and dependants) notification of the special election period.


Cobra the american recovery reinvestment act of 20094
COBRA The American Recovery & Reinvestment Act of 2009

  • When Does Coverage Begin?

    • Subsidy Begins March 1, 2009

      • For groups using calendar months as the period of coverage (most groups)

  • Coverage Ends:

    • Date AEI is “eligible” for other coverage

    • Nine months from the first day the subsidy applies

    • The end of “maximum” COBRA period


Cobra the american recovery reinvestment act of 20095
COBRA The American Recovery & Reinvestment Act of 2009

  • Penalty To AEI For Over Staying Their Welcome!

    • 110% of subsidy provided for the AEI after the date AEI became eligible for other coverage

  • COBRA Premiums Can Be Less Than Full Insurance Premium

    • Employer subsidy would be based on 65% of the lower premium and the employee would have to pay the difference


Cobra the american recovery reinvestment act of 20096
COBRA The American Recovery & Reinvestment Act of 2009

  • 63-Day Break In Coverage Rule for Pre-existing Conditions

    • Rule does not apply to a coverage break due to non-acceptance of initial COBRA offer when “Special Election” is accepted


Cobra the american recovery reinvestment act of 20097
COBRA The American Recovery & Reinvestment Act of 2009

  • High Income Clause

    • “High Income” over $145k Single ($125 phase out)

    • over $290k Joint Return ($250 phase out)

    • Two Options

      • Waive subsidy

      • Take subsidy and repay the subsidy as additional tax for the year subsidy was taken

      • Note – waiving is permanent. Need to consider whether the individual might qualify in 09 even if not eligible in 08.


Cobra the american recovery reinvestment act of 20098
COBRA The American Recovery & Reinvestment Act of 2009

  • Administrator’s Requirements

    • Beginning March 1st – ensuring AEI pays only the 35% required

      • Not practical (since notices just released)

      • If full premium is paid by AEI then

        • Refund 65% to the AEI within 60 days

        • Apply to future payments within 180 days

    • Administrator must provide notices regarding the subsidies to all current COBRA beneficiaries and those who were eligible for “special enrollment”


Cobra the american recovery reinvestment act of 20099
COBRA The American Recovery & Reinvestment Act of 2009

  • Subsidy does not apply to FSA

  • COBRA is not retroactive to original COBRA eligible date

  • The end of the subsidy does not end COBRA (eligible for longer period of coverage)


Cobra the american recovery reinvestment act of 200910
COBRA The American Recovery & Reinvestment Act of 2009

  • Plan Enrollment Option

    • Can (if employer allows) elect different coverage that the AEI had at the time of the QE

    • COBRA premium cannot exceed current coverage premium

    • Must be available to active employees

    • Election period not less than 90 days


Cobra the american recovery reinvestment act of 200911
COBRA The American Recovery & Reinvestment Act of 2009

  • What needs to be done now

    • Identify all potential AEIs

    • Identify all COBRA QBs who meet the subsidy requirements

    • Adopt waiver forms for High Income

      • When available from Sec. of Treasury

    • Develop and provide notices required by ARRA

      • Model from Dept. of Labor is now available

    • Determine whether to implement the special coverage option


Cobra consolidated omnibus budget reconciliation act amended by

COBRA

Consolidated Omnibus Budget Reconciliation Act

Amended by:

The American Recovery & Reinvestment Act 0f 2009


Hra consumer driven health plan with the employer having increased control

HRA

Consumer DrivenHealth Plan

With The Employer Having Increased Control


Agenda
Agenda

Health Insurance Marketplace

Coverage Options

How HRA’s Work

Advantage to Employer

Advantage to Employee


Employer and employee health insurance costs
Employer and Employee Health Insurance Costs

  • Since 1999, employment-based health insurance premiums have increased 120%,compared to cumulative inflation of 44%and cumulative wage growth of 29% during the same period

  • The average employee contributionto company-provided health insurance has increased more than 120% since 2000

  • Average out-of-pocket costsfor deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115% during the same period

  • The Henry J. Kaiser Family Foundation. Employee Health Benefits: 2008 Annual Survey. September 2008.


Health plan options
Health Plan Options

  • Traditional Insurance

    • Deductible / Co-insurance / Stop Loss

  • PPO (Preferred Provider Organization

    • Network of providers with a negotiated discounts

    • Out of network option for employees

  • HMO (Health Maintenance Organization)

    • Smaller network with negotiated discounts

    • No out of network coverage


Health plan options1
Health Plan Options

  • Consumer Driven Health Plans (CDHP)

    • Health Savings Accounts (HSA)

    • Health Reimbursement Arrangements (HRA)

    • Flexible Spending Accounts (FSA)

      • Also known as cafeteria plans and 125’s


Consumer directed health plans cdhp
Consumer Directed Health Plans (CDHP)

Health Savings Accounts

With HSA qualified plans, employees determine how to best utilize the benefits above the deductible level and whether to use their HSA funds or save for the future

Health Reimbursement Arrangements

With HRA plans, employers determine what coverage they want to reimburse for employee eligible health care expenses

Flexible Spending Accounts

Allows an employeeto pay for sections 213d expenses with employee money on a pre-tax basis


Health savings accounts hsa
Health Savings Accounts HSA

Qualified High Deductible Health Plan

Health Insurance

Then you can establish

Health Savings Account


Health reimbursement arrangement hra
Health Reimbursement Arrangement (HRA)

Health Reimbursement Arrangement

Then you can pair with

Any Health Plan (if desired)


Hra is not a product it s a strategy
HRA is not a product; it’s a strategy

What is it?

Employer-funded plan that reimburse employees for incurred medical expenses that are not covered by the company's insurance plan

HRAs are among the most flexible insurance products on the market. These federally approved accounts may be tied to high deductible insurance plans, or they may be offered on their own

HRAs are similar to Flexible Spending Accounts (FSA); however, while an FSA is an add-on to your already existing medical coverage, an HRA is your medical coverage

The goal is to create informed and confident consumers capable of making value-based healthcare decisions


Hra employer benefits
HRA Employer Benefits

Control Cost of

HealthCare

Tax Advantages

Cash Flow

Retention

  • Promise to pay; no cash up front

  • Employer only pays select 213d expenses

  • Funds not portable

  • Employers “investment” creates employee loyalty

  • Employers may stimulate retention with a plan which allows employees to keep funds (not required)

  • Employer’s save on premiums

  • HRA contribution tax deductible to employer and not taxable to the employee



Hra employee benefits
HRA Employee Benefits

  • Lower premium cost

  • Lower out of pocket cost for health care claims*

  • Benefits of HRA non-taxable to the employee

  • Better understanding of the value of their health insurance

    * Depending on plan design chosen by the employer


Carryover
Carryover

With an HRA, unused fund amounts may be carried over from year to year. This differs from a Flexible Spending Account which maintains the “use-it-or-lose-it” rule

The employer has full discretion over how the carryover is managed. 

You may choose to allow the employee to keep all unused funds for use in later years, keep only a portion of unused funds, or forfeit all remaining unused funds after the Plan year is complete.


Reimbursement
Reimbursement

All requests for reimbursement under an HRA must be substantiated. 

The most common means of substantiation is the Explanation of Benefits (EOB) statement provided by the employees’ health insurance provider after a medical expense has been incurred.


Rules
Rules

Coordination with a Flexible Spending Account

An employer may choose to offer a Flexible Spending Account Plan (FSA) in conjunction with an HRA

Combining an FSA with an HRA allows employees to bridge the gap between the employer sponsored HRA and the health insurance plan

In a situation where an incurred medical expense could be reimbursed from either the FSA or HRA, the employer or plan administrator will determine the “ordering rules” which determine which account the expense shall be reimbursed from first


Cobra
COBRA

HRAs are subject to COBRA

Employees experiencing a qualified event must be given the opportunity for continued participation in the HRA offered by the employer. 


Cobra consolidated omnibus budget reconciliation act amended by

Important differences between Traditional plans without HRA’s and plans with HRA’s and/or HSA’s attached.


Optima health s hra

Optima Health’s - HRA HRA’s and plans with HRA’s and/or HSA’s attached.

An Integrated Health Plan and HRA Model


Optima design hra
Optima Design HRA HRA’s and plans with HRA’s and/or HSA’s attached.

Optima Design HRA offers employers a fully integrated health plan and HRA funding option combinedwith flexibility needed to design the HRA to achieve their goals

Employer Flexibility

to Customize HRA

Choice of

Benefit Plans with

First-Dollar

Preventive Care

(priced 24% to 45% below

popular Optima plans)

Simplicity and Service

of a Fully Integrated

Experience


Optima design hra1
Optima Design HRA HRA’s and plans with HRA’s and/or HSA’s attached.

Flexibility to design the HRA funding

Employer decides the HRA contribution amount

Employee

dollars

first

Employer / Employee

cost share

as eligible claims

incurred to

the HRA

contribution cap

Employer

dollars first

OR

OR

HRA reimburses for deductible expenses only in core plans


Cobra consolidated omnibus budget reconciliation act amended by

Easy online access account information (claims and payment and balances)

Employers can monitor expenditures and balances online for better expenditure predictability

Integrated claims feeds satisfy substantiation requirements

Optima Design HRA


Cobra consolidated omnibus budget reconciliation act amended by

Service of a Fully-Integrated Experience and balances)

Veteran of HRA administration

Operational strengths & flexibility simplify the customer experience--making for seamless claims processing.

Currently administers 2,300 groups and 51,000 accounts of HRA business across the country.

Optima Design HRA


Optima design hra2
Optima Design HRA and balances)

Choice of Benefit Plans with First-Dollar Preventive Care

Optima Design Vantage

Optima Design Plus

OR

  • Two core in-network deductible options

    • $1500 individual / $3000 family OR $3000 individual / $6000 family

  • Two core in-network co-insurance options after deductible

    • 100% OR 80%

  • First dollar preventive care coverage

  • Total of 2 medical and 2 behavioral health office visits at standard co-pay, no deductible

  • Traditional Rx benefit with co-pay tiers outside of the deductible

All Other Benefits Subject to Deductible, Then Coinsurance