AB 23-AGENT & BROKER Q & A FROM DOI

The recent federal stimulus plan provides for a 65% reduction in COBRA premiums for eligible individuals for up to nine months. Assembly Bill 23 (AB 23) requires insurers to mail a notice of the right to elect Cal-COBRA health insurance coverage to everyone who was laid off between September 1, 2008 and December 31, 2009. This includes current Cal-COBRA recipients and allows them to choose the 65% reduction as well.

How is AB 23 different than the American Recovery and Reinvestment Act of 2009 (ARRA) signed into federal law on February 17, 2009?
AB 23 requires insurers to extend federal premium assistance of 65% reduction to Cal-COBRA premiums to employees who were involuntarily terminated between September 1, 2008 and December 31, 2009 and worked for an employer with fewer than 20 employees that offers health care coverage.

Which segments of the business community does this affect?
This bill impacts small businesses (2-19 employees) that offer health care benefits and would notify their health insurers of involuntarily terminated employees.

What are clients that are members of this segment of the business community responsible for?
These employers are still required to promptly notify their health insurer of all employees who are involuntarily terminated. In addition, they must respond promptly to their insurer’s requests for employee verification of the involuntary termination. If they involuntarily terminate(d) employees between September 1, 2008 and December 31, 2009 they must sign a “Verification of Involuntary Termination Form.” These forms will be supplied by the insurers to verify the involuntary layoff.

If my clients have former employees that enrolled in Cal-COBRA after September 1, 2008, what are they eligible for?
These employees must complete a “Request for Treatment as an Assistance Eligible Individual Form.” If eligible, they can obtain premium assistance back to March 1, 2009 or later. If an employee is currently enrolled under Cal-COBRA, they are eligible as of March 1, 2009.

If my clients have former employees that chose not to enroll in Cal-COBRA after September 1, 2008, can they enroll now and what are they eligible for?
If an employee was involuntarily terminated between September 1, 2008 and December 31, 2009, they should be eligible for the premium assistance assuming they meet the other federal requirements. The insurer has 14 days from the date AB 23 was signed by the Governor (May 12, 2009) to notify the former employees of their ability to enroll, similar to the notifications the employee received when employment was originally terminated but now it will include information about the federal premium assistance. The employee then has 60 days to enroll in Cal-COBRA and elect to receive the premium assistance.

What can be done if the former employer’s group health plan denies an application for the premium reduction for Cal-COBRA participants?
The applicant can appeal. The Secretary of the Department of Health and Human Services (HHS) is required to make a determination regarding an appeal within 15 business days after receiving a request for review. The Center for Medicare and Medicaid Services (CMS), which is part of HHS, will oversee appeals for federal, state, and local governmental employees, as well as appeals related to Cal-COBRA. CMS expects to begin processing appeals no later than May 1, 2009, and will provide further information regarding where to submit appeals in the near future.

Inquiries regarding Cal-COBRA subsidy appeals should be directed to :
NewCobraRights@cms.hhs.gov or the following address: CMS c/o COBRA APPEALS 7500 Security Blvd. Baltimore, MD 21244 Mail Stop C2-12-16
California Department of Insurance 1-800-927-HELP www.insurance.ca.gov