State continuation and the stimulus subsidy for insurers/producers

The governor signed legislation April 28, 2009 that allows the state to extend state continuation from six to nine months, effective immediately.

The legislation ensures that Oregonians who work for employers with fewer than 20 employees can receive the full nine months of health insurance premium subsidies available under the American Recovery and Reinvestment Act of 2009.

However, the nine months of state continuation is now available to all Oregonians, even those who don't receive the subsidy.

If you have questions about this, please call the Insurance Division advocates at: 503-947-7984, 1-888-877-4894 or e-mail cp.ins@state.or.us

General information on state continuation

Is the nine months of state continuation available for everyone or just those eligible for the subsidy?
The nine months applies to everyone regardless of their eligibility for the federal subsidy.

I have employees who are now part-way through their sixth month of state continuation. Can they keep their plans another three months?
Yes. Individuals who are not eligible for the subsidy will receive three additional months. Those eligible for the subsidy get a full nine months of subsidy, which means they may end up with more than nine months of state continuation. We'll explain how to count their nine months below.

Is the change to nine months permanent?
Yes.

Who is eligible for state continuation?
People who had at least 90 days of continuous group coverage (can be more than one employer) on the date their coverage ended. Also, employees are not eligible for state continuation (or the federal subsidy, for that matter) if they are eligible for Medicare or other group health insurance.

Federal stimulus subsidies

Insurer role

What are insurers' responsibilities for the federal subsidy program?

• Insurers must notify all state continuation employees who lost jobs after August 31, 2008, and before Jan. 1, 2010, of their new opportunity to elect state continuation with a subsidy. Not all people who get the notice will be eligible for the subsidy. State continuation notices that were sent to people but didn't include information on the subsidy do not meet this requirement.
• Insurers must accept 35 percent of the premium from subsidy-eligible Oregonians as full payment.

Are these notice requirements a permanent part of state continuation?
No. These apply only to this federal stimulus subsidy program.

When must notices go out?

• Employees who lost jobs after August 31, 2008, and before April 28, 2009: Insurers must send notices within 30 days of April 28, 2009.
• Employees who lose jobs going forward: Insurers must send notices within 10 days of acting on an employee's loss of coverage. This notice may be included with the portability notice.

Can insurers use their own notices?
Yes, state rules specify what must be included in the notices. The state has also produced a Sample Second Election Notice for people who lost jobs in the past - after August 31, 2008, and up to April 28, 2009. You can view it at: http://insurance.oregon.gov/consumer/consumer-issues/federal-stimulus-info/second-election-notice_sample.pdf

How long do people have to elect coverage?
Thirty-one days from the day they receive the notice.

Does a subsidy-eligible employee have to elect continuation for other family members to qualify?
No. Other family members have "independent" election rights. The family can choose to cover everyone, just one person or any combination. This is only true of those eligible for the subsidy. In families that don't qualify for the subsidy, the employee must continue coverage if any other family members want to stay insured.

Counting the nine months of subsidy

When does the nine months of subsidy begin?
Every subsidy-eligible individual receives the full nine months of subsidy. Here's how to count:

• Employees who lose their jobs going forward: People who lost jobs after Feb. 16, 2009, qualify for subsidized coverage on the day their "old" coverage ends. They are entitled to a full nine months of subsidy. So, a worker who loses a job and group health coverage, effective December 2009, is entitled to nine months of subsidy.
• Employees who lost jobs after August 31, 2008 and didn't elect continuation or elected and dropped continuation or elected continuation and their coverage ended: Nine months of subsidized coverage starts March 1, 2009. They must also pay their 35 percent share of the premium back to March 1. Example: Sally lost her job in November, 2008. She paid continuation premiums in November and December but ran out of money and had to give up insurance. She now is eligible for nine months of subsidized insurance, starting March 1, 2009.
• Employees who lost jobs after August 31, 2008, and paid for continuation on their own: They are eligible for nine months of subsidy beginning March 1, 2009. Example: Joe lost his job in November and paid state continuation on his own through March. He gets nine months of state continuation with the subsidy, starting March 1. (This means he gets credit for 65 percent of what he already paid that month.)

Other subsidy questions

If someone is involuntarily terminated before Sept. 1, 2008, but loses coverage and becomes eligible for COBRA or state continuation coverage after Sept. 1, are they eligible for the subsidy?
No.

If someone loses their job Dec. 31, 2009, but their coverage doesn't end until after Dec. 31, are they eligible for subsidy?
No.

What about portability coverage?
Employees who lose their jobs may also choose to stay covered through a portability plan offered by the same insurance company that provides the employer's group coverage. The federal subsidy is not available to portability plans. However, once state continuation ends, employees will receive notice of the opportunity to move to a portability plan.

Are dental/vision insurance included in the federal subsidy?
Yes, if an employer and insurer allows a former employee to continue these coverages. However, the employer does not have to allow this.

What happens with pre-existing conditions for employees with a gap in coverage?
People who elect continuation of coverage - even after a gap of more than 63 days - are treated as though they had continuous coverage.

Example: Taylor lost his job and health insurance in November and didn't continue coverage. In April, after hearing about the federal subsidy, Taylor asked about state continuation and filled out an election form. His coverage and nine months of subsidy began March 1. His diabetes is covered as of March 1 and he gets reimbursed for any covered medical bills he incurred starting in March. However, he must pay any medical bills incurred in December, January and February.

Are domestic partners eligible for the subsidy?
No. The federal law defines a "qualified beneficiary" as a spouse or a dependent child of a covered employee. This means that while domestic partners are eligible to stay on the employer plan, the costs of the employee's partner will be subtracted from the amount eligible for premium reduction.

Example: An employer plan costs $1,000 for family coverage, $450 for individual coverage and $800 for the employee plus child(ren). Subtract $800 from the $1,000. The employee pays 35 percent of the $800 plus the remaining $200 for the ineligible partner.

What can people do if a former employer's group health plan tells them they don't qualify for the premium reduction?
The Center for Medicare and Medicaid Services (CMS) will handle appeals for state continuation. Visit: www.continuationcoverage.net or call 1-866-400-6689. The application you must use to appeal subsidy denials is posted online. You may also e-mail questions to: ContinuationCoverage@maximus.com CMS has contracted with Maximus Federal Services, Inc., to review appeals.

Do you have more information on the definition of "involuntary?"
The IRS elaborates on involuntary termination and other issues at: http://www.irs.gov/pub/irs-drop/n-09-27.pdf. Generally,

• Involuntary termination includes: layoffs, buyouts, declining to relocate, quitting because reduced hours (if the reduction in hours is a "material negative change"), etc.
• Involuntary termination does not include: death

How will we know how many Oregonians took advantage of this program?
The federal government has reporting requirements; the Oregon Insurance Division will likely ask insurers to submit this information to the state, as well.

What efforts are being made to explain this program to the public?
The Insurance Division will conduct extensive outreach to consumer and business groups as well as agents, insurers and other state agencies.

More information

In general, the federal government answers questions about COBRA and general eligibility for the stimulus subsidy, including how to define involuntary termination. The Oregon Insurance Division answers questions about state continuation.

• How to report reductions on a quarterly federal tax return Form 941: Contact the IRS at 1-800-829-4933.
• COBRA or general aspects of the federal subsidy: the Department of Labor's Employee Benefits Security Administration's Benefits Advisors at 1-866-444-3272. The DOL's Web page at www.dol.gov/COBRA is continuously updated.
• State continuation: The Oregon Insurance Department.

o Insurer/producer questions may be addressed to cp.ins@state.or.us
o Consumer questions should be directed to consumer advocates at 503-947-7984 or 1-888-877-4894.
o The division's Web site is continuously updated: www.insurance.oregon.gov
o New Insurance Division rules on state continuation: http://www.cbs.state.or.us/external/ins/rules/recent_admin_rules.html