STIMULUS PACKAGE CONTAINS COBRA SUBSIDY

On February 17, 2009 the President signed into law the American Recovery and Reinvestment Act of 2009.  This law may provide certain individuals you with the opportunity to receive (1) assistance in paying for their COBRA premiums and/or (2) a second chance for electing COBRA coverage even if the individual is not eligible to receive assistance in paying the COBRA premium.  If an individual is eligible for assistance in paying his or her COBRA premium, he or she may only have to pay up to 35% of the monthly cost of his or her premium for group health coverage under COBRA or state continuation coverage.

Who is Eligible for the COBRA Premium Assistance Subsidy?

An individual is eligible for the COBRA Premium Assistance Subsidy if you meet the following conditions:

1)     At any time during the period that begins with September 1, 2008 and ends with December 31, 2009, an individual was involuntarily terminated from employment, other than for gross misconduct with his or her employer and the individual his or her qualified spouse and/or his or her dependent(s) are eligible for COBRA  coverage or state continuation coverage

2)     The individual, his or her qualified spouse or dependent(s) is eligible for COBRA Coverage or state continuation coverage.  The individual cannot be terminated for reasons of gross misconduct.

3)     The qualifying event with respect to the COBRA coverage consists of the involuntary termination of the covered employee’s employment and occurred on or after September 1, 2008 and on or before December 31, 2009.

4)     The individual is currently not eligible for coverage under any group health plan as an employee or dependent (other than coverage consisting of only dental, vision, counseling, or referral services, or a combination thereof), coverage under a health reimbursement arrangement or a health flexible spending arrangement or coverage of treatment that is furnished in an on-site medical facility maintained by the employer and that consists primarily of first-aid services, prevention and wellness care, or similar care (or a combination thereof) or is eligible for benefits under Medicare.

5)     The individual ‘s adjusted gross income for federal tax purposes for the taxable year(s) during which he or she receives this assistance will not exceed $145,000 if the individual is single or $290,000 if the individual is married and filing a joint return. (Note: If you are single and your adjusted gross income is between $125,000 and $145,000 or you are married and filing a joint return and your adjusted gross income is between $250,000 and $290,000, part or all of the individual’s  Premium Assistance Subsidy will be taxable. Please note, if an individual does receive COBRA premium assistance subsidy and have income as detailed above, the amount the individual receives will be included in his or her taxable income for the tax year(s) affected.

Remember if an individual is eligible for the COBRA Premium Assistance Subsidy and elects it, such election will disqualify the individual for the Health Coverage Tax Credit. If an individual is eligible for the Health Coverage Tax Credit, which could be more valuable than the Premium Assistance Subsidy, you will have a notification from the IRS.

Even if an individual is not eligible for the COBRA Premium Assistance Subsidy, may the individual, his or her qualified spouse and/or dependents elect COBRA coverage?

Yes. If an individual was involuntarily terminated from employment from his or her employer anytime on or after September 1, 2008 and before February 17, 2009 and are eligible for COBRA coverage, he or she will an another opportunity to elect COBRA coverage again even if he or she, his or her your qualified spouse and/or dependent(s) waived COBRA coverage in the past.

This special enrollment period may not apply to certain state continuation coverages. An individual should check with his or her employer, COBRA administrator or insurance company of details.

What if an individual did not elect COBRA coverage and his or her initial enrollment period has expired?

The individual, his or her qualified spouse and/or dependent(s) will have 60 days from the date of the Special Enrollment Election Notice to elect COBRA coverage again even if he or she eligible for the COBRA Premium Assistance Subsidy.  An individual, his or her qualified spouse and/or dependents may do so by completing the Special Enrollment COBRA Election Form and returning it to employer or COBRA Administrator specified on the notice.  You must pay the initial COBRA premium within a period of time specified in the Notice.

When will the new COBRA coverage start?

If the individual is eligible, his or her coverage under your employer’s group health plan will be effective the later of the first coverage period after the date of enactment (February 17 2009 (March 1, 2009 for calendar month plans) or the date of the individual’s involuntary termination with his or her employer.

When will the new COBRA coverage end?

The individual COBRA coverage will terminate on the earliest of following events to occur:

1)     18 months after his or her original qualifying event date (or the end of coverage period for the standard extensions of coverage under COBRA such as death of the employee, dependent ceases to be eligible for coverage, you are on Military Leave or you become SSA disabled);

2)     The date the individual is covered under any group health plan,

3)     The first day of the month for which the qualified beneficiary’s COBRA premium is not timely paid;

4)      The date the individual’s employer ceases to maintain any group health plan for its employees.

5)     The individual becomes eligible for Medicare.

What will the COBRA premium be under the COBRA Premium Subsidy and how long can the individual receive it?

If an individual is eligible for the COBRA Premium Assistance Subsidy, he or she will be required to pay up to 35% of the normal COBRA premium for the group health plan coverage in which the individual enrolled in under COBRA.  Failure to make the payment within the payment period specified will result in the automatic termination of the COBRA coverage and the individual will not be able to reinstate it at a later date.

The individual will continue to receive the COBRA Premium Assistance Subsidy until the earliest date to occur:

1)     The individual becomes eligible for coverage under any group health plan (other than coverage consisting of only dental, vision, counseling, or referral services, or a combination thereof), coverage under a health reimbursement arrangement or a health flexible spending arrangement or coverage of treatment that is furnished in an on-site medical facility maintained by the employer and that consists primarily of first-aid services, prevention and wellness care, or similar care (or a combination thereof) or is eligible for benefits under Medicare.

2)     9 months after either the first day of the first coverage period after enactment (February 17, 2009) (March 1 2009 for calendar month plans) or the first month after enactment that the individual becomes eligible for COBRA coverage.

3)     following the expiration of the maximum period of continuation coverage required (i.e. 18 months, 29 months or 36 months) that would normally apply.

If the individual is not eligible for COBRA Premium Assistance Subsidy, he or she will be required to pay 102% of the COBRA premium.  For state continuation coverage, the premium will be 100% of the premium

What Group Health Plans are eligible for the 35% reduction in premium?

The following plans are eligible for the 35% reduction:

1) Medical Coverage

2) Dental Coverage

3) Vision Coverage

4) Employee Assistance Plans (other than referral only plans)

5) Health Reimbursement Arrangements (HRA’s)

Remember, many state continuation coverages only apply to medical coverage.

Note:  Health Care Flexible Spending Account plans are not eligible for this subsidy.

How does an individual apply for the COBRA Premium Assistance Subsidy?

If an individual are currently enrolled in COBRA coverage and his or her involuntary termination date was on or after September 1, 2008 but on or before December 31, 2009:

An individual must complete an Application for COBRA Premium Assistance Subsidy.  Upon acceptance, the individual will be notified of how much premium you will need to remit and when initial payment is due.  Please note, an individual must continue to make your normal COBRA premium payment until he or she is approved for the COBRA Premium Assistance Subsidy.  Upon approval, any overpayment will be credited towards the individual’s future COBRA premiums.

If an individual is not approved, he or she will be notified of the denial and the reason for denial and the amount of the unreduced COBRA premium.

If an individual is not currently enrolled in COBRA coverage and his or her involuntary termination date was on or after September 1, 2008 but on or before February 16, 2009:

An individual must complete the an Application for the COBRA Premium Assistance Subsidy, the Special Enrollment Election Form and he or she will be informed when he or she must submit your initial premium payment

If the individual is not approved for the COBRA Premium Assistance Subsidy, he or she will be notified of the denial and the reason for the denial and the amount of the unreduced COBRA premium.

Please Note:  Failure to provide the proper notification to the designated representative of the employer may result in the individual’s loss of eligibility for the COBRA Premium Assistance Subsidy, but not of continued COBRA coverage.  All requests must be submitted in writing.  No verbal requests will be accepted.

How does an individual apply for COBRA Coverage if he or she is not eligible for the COBRA Assistance Subsidy, but have been involuntarily terminated?

An individual must complete the Special Enrollment Election Form within 60 days from the date of Special Enrollment Election Notice and he or she will be informed when he or she must submit his or her initial premium payment. Please note, COBRA coverage will not be reinstated and claims will not be paid until receive the full initial premium due is received

How does an individual notify the Plan Administrator of his or her or his or her Dependent’s eligibility for coverage under another group health Plan or Medicare after he or she begins to receive the COBRA Premium Assistance Subsidy?

An individual must notify his or her employer or COBRA Administrator in within 30 days of the first date in which he or she or his or her dependent will be eligible for coverage under another group health plan or Medicare.  The individual must do so in writing and include his or her name, the name of any other covered beneficiaries who are also now covered, the name of the employer that is receiving COBRA coverage from, the name of the group health plan that the individual will now be eligible for coverage under and the date he or she is be eligible.

Note:  Failure of an individual to provide notification of his or her eligibility for coverage under another group health plan or Medicare may result in a penalty of up to 110% of the amount of COBRA Premium Assistance Subsidy that the individual did receive.

What happens if the COBRA premiums that the individual is currently paying are already less than 35% of the total COBRA premium?

If an individual is  currently receiving a subsidy from either  his or her employer or any other source such as the Health Care Tax Credit and the subsidy results in your COBRA premium being less than or equal to 35% of the total cost of COBRA premiums, he or she does not need to do anything.  The individual’s premiums will remain the same.

However, if the individual’s current payment agreement ends within 9 months of the date either of coverage after the date of enactment (March 1, 2009 for calendar month plans) or within 9 months of the individual’s COBRA effective date (for involuntary terminations on or after September 1, 2009 but on or before December 31, 2009), the individual may be eligible for the COBRA Premium Assistance Subsidy for the remaining months.

If an individual needs additional information regarding the American Recovery and Reinvestment Act of 2009 or wish to appeal a declined application for the COBRA Premium Assistance Subsidy, he or she can go to: www.dol.gov/COBRA or call 1-866-444-EBSA (3272).

Can an individual enroll in another health plan that costs less money when receiving COBRA coverage?

An employer can decide to allow individuals to select from the current plan(s) available which have a lower monthly premium.  Such individuals will have 90 days from the date of a notice to change his or her current benefit election(s).  The plan with lower premiums may offer less benefits than the individual currently receives.

New Law Increases Requirements Under The HIPAA Privacy Rules For Business Associates

The American Recovery and Reinvestment Act of 2009 (ARRA) approved by Congress on February 13, 2009 and signed into law by the President on February 17, 2009, makes a number of modifications to the Health Insurance Portability and Accountability Act (HIPAA) regarding privacy and security rules.

The legislative changes that affect HIPAA create many new requirements, enforcement provisions and penalties for covered entities, business associates, vendors and others.  Many changes are focused on HIPAA’s privacy and security requirements and will require businesses to change the way they currently do business.  There are significant changes to all Covered Entities (defined under HIPAA as health care providers that conduct certain electronic transactions, health care clearinghouses, and health plans), but are most challenging for Business Associates (individuals or corporate persons that perform ANY function or activity involving the use of Protected Health Information (PHI), who now face a host of new requirements.

Business Associates Required to Comply with HIPAA Privacy and Security Rules

Under HIPAA, Business Associates have been  not directly regulated and have not been subject to HIPAA’s penalty provisions.  Because HIPAA only requires a contract between the Business Associate and the HIPAA-covered entity, the only sanctions Business Associates faced for failure to protect health information was a breach of contract claim.  However, ARRA makes significant changes to the way Business Associates are treated under HIPAA.

ARRA specifies that any entity that engages in health information exchanges or provides data transmission of PHI (including Personal Health Record (PHR) vendors and health information exchanges) is considered a Business Associate.  As such, these entities must enter into a business associate contract with the covered entity and will be subject to ARRA’s civil and criminal penalty provisions.

Additionally, ARRA requires that the administrative, physical and technical safeguards and the policy, procedure and documentation requirements of HIPAA’s security rule apply to Business Associates of a covered entity in the same manner as they apply to the covered entity.  These additional requirements must be incorporated into Business Associate contracts and agreements and include notification provisions for a breach and the application of ARRA’s criminal and civil penalties.   With regard to HIPAA’s privacy rules, Business Associates are prohibited from using or disclosing any PHI in a manner which is not in compliance with the Business Associate contract or agreement required terms under HIPAA.  These changes become effective February 17, 2010 (one year after the enactment of ARRA).

Notice to Individuals of Privacy and Security Breaches

ARRA also imposes certain notification requirements on covered entities and Business Associates in the event of a breach of “unsecured protected health information.”  A breach is defined as “the unauthorized acquisition, access, use, or disclosure of protected health information which comprises the security or privacy of such information, except where an authorized person to whom such information is disclosed would not reasonably have been able to retain such information”.  Unsecured protected health information is defined as protected health information that the covered entity or Business Associate has not secured via standards approved by the Secretary of Health and Human Services (Secretary).

Generally, the notification of a breach must be provided “without unreasonable delay”, but in no case later than 60 days after the discovery of the breach or when the breach should reasonably have been discovered.  Since the 60 days is the outer limit for notification, if the full 60 day window is used, the covered entity or Business Associate involved in the breach must be prepared to justify their reasons for not providing notification of the breach sooner.  However, notice of a breach may be delayed provided that notification would hinder a criminal investigation and/or injure national security (as determined by a law enforcement official).

For Business Associates that discover a breach, the Business Associate must notify the covered entity of the breach or potential breach and the identify of all individuals affected or potentially affected.  For covered entities, notification must be made to individuals whose unsecured protected health information has been accessed, acquired or disclosed or is reasonably believed to have been accessed, acquired or disclosed as a result of a security or privacy breach.  In general, notification to affected individuals must be sent via first class mail.  However, where a breach involves 10 or more individuals whose contact information is out-of-date or deficient, notification must be posted to the covered entity’s website or published in major print or broadcast media. For a breach that involves 500 or more individuals, the covered entity involved in the breach must also give notice to prominent media outlets in the applicable jurisdiction or state.

Notice of all breaches must be provided to the Secretary.  If the breach affects 500 or more individuals, the covered entity involved in the breach must immediately notify the Secretary.  For breaches that affect less than 500 individuals, the covered entity involved in the breach may notify the Secretary of any breaches on an annual basis.

To the extent possible, all notices must contain:

1. A brief description of what happened, including the date of the breach and the date of the discovery of the breach (if known);

2. A description of the types of unsecured protected health information involved in the breach (e.g., social security number, date of birth);
3. The steps individuals should take to protect themselves from potential harm as a result of the breach;

4. A brief description of what the entity involved is doing to investigate the breach, to mitigate losses and to protect against further breaches; and

5. Contact procedures for individuals to ask questions or receive additional information, including a toll-free telephone number and an e-mail address, web site or postal address.

Expansion of Accounting of Disclosures

ARRA changes the existing limitations on accounting for disclosures of health information to individuals who request the disclosure.  If a covered entity uses or maintains an Electronic Health Record (EHR), then individuals will be allowed to receive an accounting of the disclosures of PHI for treatment, payment and health care operations made from the EHR.  The period of mandated disclosure is limited to the 3 year period prior to the individual’s request.  A reasonable fee may be charged to the requesting individual, provided the fee is not greater than the labor costs involved in complying with the request.

The Secretary is required to adopted regulations that specify the information to be contained in the accountings within 6 months of ARRA’s enactment.  Covered entities that began using EHR prior to January 1, 2009 will be required to provide the accounting upon request effective January 1, 2014.  Covered entities that begin using EHR after January 1, 2009 will be required to provide the accounting upon request effective January 1, 2011.

Mandatory Restrictions on Disclosure of PHI when Requested by Individuals

Under ARRA, individuals are given the right to restrict the disclosure of PHI related to treatment, payment and health care operations provided:

1. The restriction relates to disclosure for purposes of payment or health care operations;

2.  The restriction does not relate to disclosure for purposes of treatment; and

3. The PHI relates only to an item or service for which the provider has already received payment in full.

Right of Individuals to Receive Electronic Records

If a covered entity maintains EHRs that contain PHI, ARRA provides individuals with the right to obtain a copy of their records in an electronic format or to request that the record be transmitted to a third party.  The covered entity may not charge the individual requesting the copies more than the total cost of labor incurred by the entity in transmitting the copies.

Clarification of the Minimum Necessary Standard

Pending additional guidance from the Secretary, a covered entity will be considered to be in compliance with the minimum necessary standard if, to the extent possible, the covered entity limits the disclosure to a limited data set or to the minimum data necessary to accomplish the intended purpose of the disclosure or use of the information.  The Secretary is required to issue guidance within 18 months of ARRA’s enactment.

Increase Use of De-Identifed Information

ARRA requires the Secretary to issue guidance on how covered entities can comply with requirements related to the use of de-identified PHI.  Such guidance must be issued within 1 year of ARRA’s enactment.

Enforcement and Penalties

ARRA authorizes the Secretary to conduct periodic audits of covered entities and Business Associates to ensure compliance with HIPAA and ARRA requirement.  The Secretary is also authorized to utilize civil enforcement provisions even if the action in question violated the criminal provisions, provided no criminal conviction is associated with the conduct.

The Secretary is required to impose civil penalties if a violation is due to willful neglect and to formally investigate any complaint if a preliminary investigation indicates the potential of violation due to willful neglect.  For cases involving violations where the individual did not know of the violation or where the individual would not have known of the violation by exercising reasonable diligence, corrective action rather than penalty may still be used.

Under ARRA, criminal enforcement for certain HIPAA violations is not limited to covered entities.  For purposes of criminal enforcement provisions, ARRA provides that “a person (including an employee or other individual)” is considered to have obtained or disclosed individually identifiable health information in violation of HIPAA if such information is maintained by a covered entity and the individual obtained or disclosed such information without authorization.

The Office for Civil Rights will receive any civil monetary penalties (CMPs) or settlements related to HIPAA security-related offenses.  Such funds will be used to fund the further enforcement of ARRA and HIPAA rules and requirements.
States’ Attorney General may bring a civil action under ARRA on behalf of state residents who have been or are threatened to be harmed by a violation to obtain injunctive relief or damages, as well as attorney fees.  Notice must be given to the Secretary and the Secretary is permitted to intervene.  The States’ Attorney General may not bring an action if a federal action by the Secretary is already pending.  These provisions only apply to violations that occur after February 17, 2009 (the date of enactment).

The Comptroller General must submit a report to the Secretary within 18 months of ARRA’s enactment that provides recommendations for determining a reasonable methodology for calculating an appropriate percentage of CMPs or settlements for individuals who have been harmed by a violation of HIPAA or ARRA.  The Secretary is required to issue regulations based on the Comptroller General’s recommendations within 3 years of ARRA’s enactment.