Infinisource DOD ACT Update

The 2010 DOD Act was signed into law by President Obama on Saturday, December 19. Attached to this act is an extension of the COBRA subsidies first enacted by earlier legislation under the American Recovery and Reinvestment Act (ARRA). Well before the latest bill was actually enacted, Infinisource had already begun to prepare communications and changes to our systems. Our team of compliance, IT, operations and service experts have worked together to make sure all communications and notices were in place so that we could act quickly on your behalf.

Please take a moment to review these Infinisource accomplishments:

• Any Qualified Beneficiaries who had an event in December 2009 was sent a corrected Qualifying Event notice that includes the new 2010 DOD Act information.
• 1,700 corrected invoices were mailed to extend the January grace period as recommended by the DOL.

• The DOL has identified an additional group of individuals that are recommended to receive notification of 2010 DOD Act and an extended election period. While Infinisource notices were updated quickly with the additional subsidy time frames, based upon the DOL comments, we will notify any Qualified Beneficiaries who had an event in December 2009 with a corrected Qualifying Event notice that includes the new 2010 DOD Act information. This will open a new election period for these individuals, which will be 60 days from the date of notice.


• The DOL clarified an important point for individuals who are eligible for the extended premium grace period because the subsidy was exhausted during the transition period. Both the December 2009 and January 2010 payment grace periods are extended to the latter of February 17, 2010, or 30 days after the notice of the extension has been provided. Therefore, Infinisource is extending the January premium payment grace period out to February 17, 2010, for those individuals.
  
  Individuals who have already been provided their election notice would not need to be provided a new COBRA Continuation Election Notice. This notice must be provided to the following:
  • Individuals who were assistance eligible individuals (AEI) as of October 31, 2009
  • Individuals who experienced a termination of employment on or after October 31, 2009, and lost health care coverage, unless they were provided a timely, updated COBRA Continuation Election Notice
  • Individuals in their transition period

• With the extended grace period, more participants will be paying for December 2009 coverage periods in 2010. The IRS has provided guidance for employers on when the payments could be deducted with Form 941 and how to handle these abnormal situations.
  
  If an employer receives an AEI’s 35 percent share of the COBRA premium in 2010, the employer should claim the premium subsidy credit on Form 941 for either the quarter in 2010 in which it receives the AEI’s 35 percent premium payment or a later quarter in 2010, but not for a quarter in 2009. An amended 941X Form would not be required for these situations.


• Infinisource redistributed any payments that were made for the full (102 percent) COBRA premium that are now eligible for the 35 percent reduced subsidy premium. A statement has been mailed to clients with affected AEIs indicating the resulting reallocations.

• The remaining group of AEIs has been sent their required notice regarding 2010 DOD Act.
• Anyone that is still within their election period will also be receiving a 2010 DOD Act notice to inform them of the additional six-month subsidy period that is now allowed for a total of 15 months.

• The maximum ARRA subsidy period, previously nine months, is now 15 months for all assistance eligible individuals (AEIs). All records have been updated to indicate the full 15 months of subsidy eligibility. This includes any AEIs whose subsidy expired November 30, 2009.
• The grace period has been extended for December 2009 coverage periods for those Qualified Beneficiaries (QBs) whose subsidy expired on November 30, 2009. They now have until February 17, 2010, to postmark the December payment.
• Notifications to AEIs whose subsidy has expired has been mailed. The remainder of the notices will begin mailing by the end of the week.
• Updated invoices have been mailed for all AEIs as of January 5, 2010.

• Notices were updated within four business days of enactment, minimizing the retroactive impact
• Updates for new elections were in place within six business days, minimizing the retroactive impact
• Participant communications will start as early as December 30, and are expected to be completed by January 8, 2010. Participants are anxious and want information - we are responding to that need.
• Our research team correctly anticipated this extension, so capacity was built into our updates early in 2009 to facilitate these changes.
• We have the resources ready and working to ensure that records are updated before the next set of reports. This will minimize questions about records changed after reports are generated.
• We have anticipated a procedural issue with carriers (the transition grace period) and provided our clients with the means to get the answer.

Your Infinisource team will continue to monitor any additional changes in the law that may occur and take necessary actions for our clients to remain compliant. We urge you to refer to The Source and visit our website at www.infinisource.net for the latest details.