Secondary events and ARRA

[Guest motor]

An employee fits all qualifications for the subsidy with a term date of 11/28/08. No problem there but upon initial termination and election (11/28/09) she elected for 2 people. Her and a child. The child had aged out as of 12/31/2008 and was issued a standard election notice (loss of dependant status) without ever responding.

Would this child be eligible for ARRA? I think not, but others disagree with the thinking that since the original qualifying event was 11/28/08 the child should be given the chance to elect under ARRA.

If the child did elect as of 12/31/2009 she wouldn't be eligible for ARRA. I don’t think ARRA would jump over the loss of dependent status.

Opinions?

Thanks.

[jstorch]

I think the child should get the second chance notice (assuming the plan is subject to Federal COBRA and not state continuation laws). At the very least, the child must get the general notice.

ARRA Section 3001(a)(7) provides that any COBRA qualified beneficiary from September 1, 2008 - December 31, 2009, not just AEIs, must get the general notice. The child meets the requirement for getting the notice.

Technically, the child also meets the definition of an assistance eligible individual under Section 3001(a)(3). Having a second qualifying event (loss of dependent status) does not change this.

Section 3001(a)(4)(A) provides that an individual who does not have an election of COBRA continuation coverage on the date of ARRA's enactment but who would be an AEI if the COBRA election were in effect has a second chance to elect COBRA. This section only applies to those covered by Federal COBRA, not state mini-COBRA.

I believe the purpose of this second chance is to allow those who declined COBRA because they couldn't afford it the chance to re-elect now that the cost is subsidized. It is possible in the situation you describe that they decided after the first month of "regular" COBRA that they could not afford to keep paying for the child's coverage and so did not respond to the second notice. In this case it would be consistent with the purpose of the second chance provisions to allow the child to make a second chance election.

Another alternative is to simply send the general notice and see if the child wishes to be treated as an AEI. If not, no need to provide additional COBRA coverage. If the child claims AEI status and wants the second chance to elect, the employer could deny it and let the DOL decide the issue by its appeal process.

[Guest motor]

Thanks,

I will be sending a general notice. I just can't get past that the subsidy would apply. The qualifying event at this point (I think) would fall onto the loss of dependant status, which does not make one eligible for the subsidy, not the mother’s original qualifying event. If the child elected under the secondary event back at 12/31/2008, this would be a separate policy from the mothers, and have the 36 month, ect ect ect....So..When I think about the general notice and if this person wants to elect, I would have to say that the event does not qualify...This might very well be something that is thrown back to the DOL.....

On the other hand, I don't think the employer would have a problem letting this person on if they insisted, just for the reason of having all bases covered when it would be much burden to them.

Thanks again and I would be interest in more opinions....

[oriecat]

The qualifying event at this point (I think) would fall onto the loss of dependant status, which does not make one eligible for the subsidy, not the mother’s original qualifying event.

I don't think having the 2nd QE cancels out the first one. They would still have a QE of termination of employment, and then an additional QE, that gives them additional coverage time. The COBRA begin date still goes from the date of the 1st QE. So I agree with jstorch and think the child would be an AEI.