As we’ve discussed in prior posts, the American Recovery and Reinvestment Act (ARRA) includes a subsidy for COBRA premiums for assistance-eligible individuals. Unfortunately, there is a great deal of confusion on the state level as to how notification of these new COBRA rights will be handled.
As you might imagine, insurance carriers aren’t going to simply volunteer to incur the time and expense of identifying all these assistance-eligible individuals (AEIs) and sending out millions of notification letters unless they absolutely must. Now, the ARRA identifies that in state continuation programs (in our case Cal-COBRA), the carrier has the responsibility to (A) manage and notify any eligible individuals and (B) pay the subsidy. The idea was to take the onus off the employer small groups altogether for Cal-COBRA. But most carriers haven’t yet explicitly stated they’re going to do that, and one of the problems is if you read any type of COBRA literature, everything ultimately falls back on the employer.
That’s why it’s essential that employers who fall under Cal-COBRA (2-20 employees) identify any AEIs and are prepared for any eventuality. Yes, it seems this notification falls on the carriers’ plates. But you should still be ready to react to any changes to model notices released by the Department of Labor.
Small group employers are understandably worried that if changes to model notices shift the responsibility, they’ll be on the hook if anything falls through the cracks. No one wants to be sued by former employees who claim that, by law, they were supposed to be notified of their new COBRA rights as defined by the ARRA.
That’s where a good broker can really provide a support system. Your broker should be both looking out for you and be ready to answer questions about the latest developments. Here at Stephenson Welsh Insurance Services, we’ve been going through our groups and giving employers a “heads-up” about these ongoing circumstances because they may need to act quickly if things change.
Be sure to contact your broker with any questions you may have. If you need a broker, feel free to contact us.