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Published: April, 2009; Vol 5, Num 11

 

Trustee Education Series:

 

The American Recovery and Reinvestment Tax Act of 2009 –
It’s About More Than Just the Stimulus
 
By Jim Conlon
 
Being a trustee of a LIUNA health and welfare fund requires a real commitment. Attending quarterly meetings, keeping current on your responsibilities by attending educational conferences and seminars, reviewing financial statements, overseeing fund professionals and vendors and making decisions about benefits involves a lot of work. Of equal importance, you have to be aware of new legislation and rules that may affect fund operations. A good example is the economic stimulus bill that was just passed, which includes a provision that affects health and welfare funds and their members.
 
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 into law. The Act includes a subsidy for certain qualified beneficiaries (plan participants) who are entitled to COBRA coverage.
 
If a participant lost or loses health care coverage due to an involuntary termination between September 1, 2008, and December 31, 2009, the Act provides for a government subsidy of 65 percent of the amount that the beneficiary would have to pay for COBRA coverage, for up to nine months of the COBRA coverage period. The beneficiary would be responsible for only 35 percent of the premium. For many LIUNA members and their dependents, that may mean the difference between being able to maintain health care coverage and joining the ranks of the uninsured.
 
As a trustee, you are responsible for making sure that the fund complies with this provision and ensuring that the fund administrator notifies affected participants in a timely manner. While anyone who was or is involuntarily terminated during the specified time period may be eligible for reduced premiums, if an involuntary termination occurred on or after September 1, 2008, and no COBRA coverage was in effect on February 17, 2009, either because the participant did not elect to take coverage or stopped paying the premium, the participant must be given a second opportunity to elect COBRA coverage.  The fund must notify participants of this opportunity by April 18, 2009, and the participant will have 60 days after the notice is provided to elect COBRA coverage. (If the participant does elect to take COBRA, the coverage period would still end 18 months after the initial qualifying event occurred.)
 
The Department of Labor has issued a model notice which is available on its web site, http://www.dol.gov/ebsa/COBRA.html, as well as additional guidance regarding the COBRA premium reductions.
 
If you have not already received information on COBRA continuation coverage assistance under the American Recovery and Reinvestment Act of 2009 from your fund’s consultant or administrator, please contact them immediately to make sure that they are aware of the requirements. This is a great opportunity to help families that are suffering in this difficult economy.
 

 

[Jim Conlon is Principal and Consulting Actuary at Milliman, Inc., an employee benefits consulting firm.  He is the Fund's national health care consultant.]