As you may be aware, Ouida Peterson, our adored Vice President of Education, passed away recently. Ouida will be remembered for her vivacious personality, passion for benefits, and professional excellence. She drafted the following Ask Ouida column prior to her passing. In her honor, we have decided to include her last words of COBRA wisdom, and as Ouida would often say to us, "Carry on … "

Also in this Comment edition is an overview of the recent Trade Adjustment Assistant Extension Act and how it relates to your employees. Keep reading Compliance Corner to find new 2012 commuter monthly maximum limits and additional details about the end of the COBRA subsidy.

In our News and Trends section, find out how employee benefits continue to be affected by the tough economy and how employers are modifying their benefits to weather the storm. Then read about a new California law related to protection of genetic information.

Until next time, thanks for reading.

Jason Culp
Senior Director of Marketing and Sales Operations

Background

An employee covered under our group health plan chose not to enroll her husband because he had health coverage through his own employer's plan. When the husband was terminated from his job on August 31, 2011, he elected COBRA with his company beginning September 1, 2011, but unfortunately, his COBRA rates for his employer plan increased to $600 per month on November 1, 2011.

Question

Our employee's husband now wants to drop his COBRA coverage and get coverage along with his wife under our health plan. Does this qualify as a HIPAA special enrollment event?

Answer

Nope, I'm sorry to say dropping coverage because rates go up isn't a HIPAA special enrollment event. Let's look at this section from the 2004 Final HIPAA Regulations:

"A special enrollment right can arise if a person with other health coverage loses eligibility for that coverage or employer contributions toward the other coverage cease, or if a person becomes a dependent through marriage, birth, adoption, or placement for adoption."

Some examples of losing eligibility include moving out of an HMO service area, a dependent aging out of the plan, or an employer dropping a class of employees from the eligibility list. Health care reform has introduced some new special enrollment rights provisions, and as long as there are grandfathered plans, we may continue to see different eligibilities and additional HIPAA special enrollment events.

HIPAA regulations explain that loss of coverage eligibility is through no fault of the qualified beneficiary – not just voluntarily dropping the coverage like the employee's husband did. In this case, the husband's HIPAA special enrollment opportunity was right after he lost his job in August. He could choose to elect COBRA continuation under his previous employer's plan or select a HIPAA special enrollment event under his spouse's health plan. The HIPAA law clearly states that application must be made within 30 days of the loss of coverage, and when that 30 day period is up, enrollment opportunities are limited to another HIPAA special enrollment event, unless it's your organization's annual open enrollment period.

In other words, the husband lost coverage through his previous employer's plan on August 31, 2011. The HIPAA special enrollment application requesting coverage under his wife's employer plan should have been made by September 30, 2011. After the end of September, he has to wait for another enrollment opportunity to occur.

The two different timelines can be confusing. Think of it like this: Qualified beneficiaries have 60 days to elect COBRA, but only 30 days to activate the HIPAA special enrollment opportunity. They can't wait until the 60-day COBRA election period is over and then get coverage from another plan with a HIPAA special enrollment event. There are two different regulations – COBRA and HIPAA – and the election timelines are different as well.

Since your employee's husband didn't lose COBRA eligibility, he's still able to continue COBRA coverage, just at a higher cost. When he totally exhausts his federal COBRA continuation, another HIPAA special enrollment event will occur – another loss of coverage through no fault of his own. This or some other qualifying event will be his chance to get coverage under his wife's health plan.

Trade Adjustment Assistance Extension Act

On October 21, 2011, President Obama signed into law the Trade Adjustment Assistance Extension Act (TAAEA), which increases the amount of the Health Coverage Tax Credit (HCTC) that is available to certain individuals receiving Trade Adjustment Assistance to 72.5 percent. The HCTC increase is to March 1, 2011, and the provision will expire at the end of 2013.

The American Recovery and Reinvestment Act of 2009 (ARRA) raised the HCTC amount from 65 percent to 80 percent through December 31, 2010. In addition, the Omnibus Trade Act, which passed in late December 2010, extended the period during which the HCTC was increased to 80 percent to coverage months beginning before February 13, 2011. With the new TAAEA legislation, individuals receiving the HCTC for coverage months March 1, 2011 and later will be eligible for a retroactive 7.5 percent additional credit to their COBRA premiums.

Qualified Beneficiaries

In addition, TAAEA provides an extension of COBRA coverage through January 1, 2014 to qualified beneficiaries who were:

• Pension Benefit Guaranty Corporation (PBGC) recipients
• Survivors of PBGC recipients
• Eligible Trade Adjustment Assistance recipients who were involuntarily terminated or experienced a reduction of hours

However, the extension is afforded prospectively only to those individuals whose coverage months would end on or after the date that is 30 days after the date the TAAEA was enacted (i.e., November 20, 2011). The individuals listed above whose coverage ended in February 2011 are not entitled to a re-election of COBRA coverage. Spouses of PBGC recipients are entitled to COBRA continuation for a period of up to 24 months after the death of the PBGC recipient, but not beyond January 1, 2014.

Additional Information

The full TAAEA text is available online and additional information regarding this new legislation can be found on the Department of Labor (DOL) website.

Commuter Benefits for 2012

The IRS recently released the 2012 maximum limits for qualified parking and transit benefits. The new limit for qualified parking benefits provided by an employer to its employees increases to $240 per month in 2012, up $10 from the 2011 monthly maximum limit. However, the temporary increase for pre-tax transit benefits extended under the American Recovery and Reinvestment Act of 2009 (ARRA) will expire at the end of 2011. The monthly maximum limit for the pre-tax transit benefit, under Section 132 transportation plan, decreases from $230 to $125 per month for 2012.

Many Section 132 plans require that participants purchase their transit passes or other media in advance. For these plans, it is critical that this information is communicated to the plan participants in advance of the ordering period for January passes.

COBRA Premium Reduction Update

COBRA Premium Reduction (Subsidy) ended on August 31, 2011; however, some individuals will still be eligible to receive the subsidy beyond that date. The American Recovery and Reinvestment Act (ARRA) provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through the end of May 2010.

Individuals who qualified on or before May 31, 2010, may continue to pay reduced premiums for up to 15 months. These qualified beneficiaries may not be eligible for another group health plan or Medicare, even if their COBRA coverage did not start until a later date, due to the terms of a severance arrangement or the use of banked hours, or other similar provision that delayed the start of their COBRA coverage. For example: If an individual was involuntarily terminated on May 31, 2010, and their COBRA coverage did not start until December 1, 2010, they would still be eligible for the full 15 months of subsidy through February 29, 2012, as long as they are not eligible for another group health plan or Medicare.

A list of frequently asked questions related to the end of the COBRA subsidy is on the DOL website.

Unstable Economy Affects Employee Benefits

According to a survey conducted by the Society of Human Resource Management (SHRM), 77 percent of surveyed HR professionals said the 2011 economy negatively affected employee benefits to some extent – an increase from 72 percent in 2010. The survey also found more employers offered benefits that put responsibility on employees for managing retirement savings, leave, and health care costs.

Most employers provided a preferred provider organization (PPO) for employee health care, and only one-third of employers offered health maintenance organization (HMO) coverage. Health savings accounts (HSAs) gained in popularity as a benefit in 2011, with 35 percent providing HSAs.

Workplace flexibility benefits also increased in 2011, with 53 percent of surveyed HR professionals providing flextime as a benefit, up almost 5 percent from the previous year. Twenty percent offer telecommuting on a full-time basis, an increase of 17 percent from last year.

Additional information about the SHRM 2011 Employee Benefits Research Report is available online.

California Law Bans Genetic Discrimination

A new California law derived from the federal government's Genetic Information Nondiscrimination Act of 2008 (GINA) goes into effect on January 1, 2012. California employers who regularly employ five or more workers will be affected by the new law.

Under the new state law, dubbed "CalGINA," an employer cannot ask a job applicant to take a genetic test to determine if the applicant has a predisposition for a disease or condition that could potentially cost the employer higher medical premiums. Additionally, the employer cannot terminate an employee because his or her parent has a genetic disease, for example Huntington's disease. Genetic information consists of:

• An individual's genetic tests
• The genetic tests of an individual's family members, diseases or disorders suffered by family members
• A request for, or receipt of, genetic services or participation in genetic-based clinical research by an individual or one of their family members

California law protects an individual from discrimination based upon genetic tests or family medical history showing that the person has a predisposition for certain health conditions, diseases, or other abnormalities. CalGINA adds genetic information as a protected characteristic to two existing state laws, California's Unruh Act and California's Fair Employment and Housing Act.

Please note: To ensure compliance with this new legislation, California employers with five or more employees may want to review their employee policies. Further information about CalGINA is available online, and federal GINA regulations can be found in the Federal Register.

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