Tuesday, March 10, 2009

Ohio & COBRA/ARRA: More Questions than Answers [UPDATED]

[Welcome Industry Radar readers!]
[Please scroll to bottom for update]
In looking through the latest missive from the (Ohio) Department of Insurance, I was drawn to this innocuous-looking requirement:
What, exactly, does that mean? As we've discussed before, it's just not cost-effective for a small employer to contract out this kind of administration, but it would be nice to know what, exactly, is going to be required of him in the event a former employee (exployee?) becomes eligible under this new program. Then, too, there are budget considerations regarding how far back the employer will need to pay.
So I poked around the DOI and DOL websites for a bit, but was unable to find anything helpful. The phone seemed to beckon me, and so I called Columbus and ended up speaking with a very nice (if befuddled) gentleman from the DOI. After introducing myself, I explained why I had called, and what had me confused. Then, I asked what it means that an employer is "required to send a notice to former employees?"
The answer was not comforting: "we really don't know yet; the legislature is working on it now." The problems include the fact that Ohio's current coverage continuation law runs for only 6 months, while COBRA/ARRA goes for up to 9. So those two have to be reconciled.
Another problem is that there's never really been any formal notice required on the state level; that is, it was up to the employee to seek out coverage. But the new law has this pesky employer requirement, which begs the question we've already mentioned. It seems to me that, with the clock already ticking, this would have been resolved and implemented. But of course, we don't want to confuse governance with common sense.
A related problem is the next sentence: "Former employees will have from the first day they are eligible until 60 days after receiving the notice to enroll." The way I read that, if one became eligible on, say December 1st, but the notice isn't received until, say April 1st (being generous and/or optimistic), how is this going to help the former employee, who now has to come up with 5 months of premium (well, 35% of premium) when they've potentially been unemployed the whole time? And, of course, the employer's 65% liability is at issue, as well.
I hate to keep saying "we'll keep you posted," but as this continues to evolve, that's the best we can do.
UPDATE: In the comments, FoIB Chad (co-blogger at Tusk and Talon) informs us that:
ARRA does require the employer (whether subject to COBRA or state continuation) to send notices to employees terminated between 9/1/08 and 12/31/09. A model notice is due to be issued by the US DOL on 3/17. For those who did not elect COBRA, coverage would be effective for coverage periods starting 2/17 or after (or 3/1 if coverage is monthly). Unlike normal COBRA, coverage is not retro to the qualifying event, rather only to the 2/17 or 3/1 date. ARRA generally does not modify state law as far as the duration of coverage.
So the coverage elected in OH should still only last for 6 months from the date of the event (e.g., if the event was 5 months ago, the EE would only get 1 month of coverage from 3/1 to 4/1). Employers/Carriers will only be able to claim a subsidy for the 6 months or less of coverage extended under OH's state continuation law. There are lots of other nuances but I'd be surprised if the DOI provides any assistance beyond leaning on your carriers to figure out, and do, whatever it is they are supposed to do.
Thank you, Chad!
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