ARRA Premium Subsidy

What the Premium Subsidy Means for Employers

The American Recovery and Reinvestment Act of 2009 (ARRA), as amended, provides for premium reductions for health benefits under COBRA. Subsidy-eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed through a tax credit to the employer or to the insurer that provides coverage.

To qualify for the Premium Subsidy, individuals must experience a qualifying event that is the involuntary termination of a covered employee's employment. The premium subsidy is available to involuntarily terminated individuals eligible for continuation coverage through COBRA or through similar state continuation coverage. The involuntary termination must generally occur during the period that began Sept. 1, 2008, and ends on May 31, 2010.

An involuntary termination of employment that occurs on or after March 2, 2010, but by May 31, 2010, and follows a qualifying event that was a reduction of hours that occurred at any time from Sept. 1, 2008, through May 31, 2010, is also a qualifying event for purposes of ARRA.

The premium reduction (subsidy) applies to periods of health coverage that began on or after Feb. 17, 2009, and lasts for up to 15 months. See Continuing Extension Act of 2010.

Important: The premium subsidy is available for a maximum of 15 months. The availability period of the subsidy does not affect or extend the standard continuation coverage periods.

• COBRA is available for up to 18 months; however, under Texas state law, some members of fully insured groups may be eligible for an additional six (6) months of continued coverage after the COBRA coverage ends.
• Texas State Continuation of Coverage applies to members whose groups are ineligible for COBRA. These members are eligible for a maximum of nine (9) months of continued coverage.

The premium subsidy program has been extended more than once since its inception and may be extended again. For the most up-to-date information about the premium subsidy program, visit the U.S. Department of Labor Web site and review the COBRA Continuation Coverage Assistance Under ARRA page  and the Premium Reduction Fact Sheet. 

Employer Process for Reporting Involuntarily Terminated Employees

Employers will need to provide Blue Cross Blue Shield of Texas (BCBSTX) with information about newly terminated employees by completing and returning the appropriate Request for Information form(s), located below.

• COBRA eligible employees 
• State Continuation eligible employees 

Secure E-mail Process

To begin, send an e-mail to bluecrossblueshield_COBRA@bcbstx.com. You will receive a special response directing you to a Web site where you will be instructed to create a protected account to submit information to BCBSTX securely

The e-mail you receive will include the Request for Information form as an attachment. Simply complete the form and return to bluecrossblueshield_COBRA@bcbstx.com as an attachment, using the same Web site you were directed to in the response e-mail. Please be sure to indicate RETURN in the subject line.

Employer Process for Reporting Involuntarily Terminated Employees who First Experienced a Reduction in Work-Hours

Additional new rights related to continuation coverage and the premium subsidy apply to a limited number of individuals who have:

• Been involuntarily terminated on or after March 2, 2010, through May 31, 2010, AND
• previously lost coverage because of a reduction in work hours that occurred between Sept. 1, 2008 through May 31, 2010,

These individuals may now be eligible for a second continuation election opportunity and for the temporary premium reduction. Employers must report potentially eligible individuals to BCBSTX so that we can provide them with the appropriate notification and application materials. Please follow the below process for reporting eligible employees to BCBSTX:

1. Review your records for individuals who were involuntarily terminated between March 2, 2010, and May 31, 2010.
2. Identify any of those individuals who lost coverage due to a reduction in work hours that occurred during the entire period from Sept. 1, 2008 through May 31, 2010.
3. Notify BCBSTX of those individuals who meet both eligibility requirements by submitting the appropriate Request for Information form as an email attachment to bluecrossblueshield_COBRA@bcbstx.com. Please remember to include the word "Return" in the subject line.

Use this form for COBRA eligible employees 

Use this form for State Continuation eligible employees 

Mail or Fax Process

Secure e-mail is the preferred method for providing the requested information. However, if you prefer to mail or fax your records, you may submit the information using the Request for Information forms below for each of your employees. You may mail the form to our COBRA Department at P.O. Box 1180, Marion, Illinois 62959, or fax the completed form to 618-998-2747.

Useful Links

U.S. Department of Labor 
Texas Department of Insurance 
Premium Reduction Fact Sheet  • En Español 
FAQs on the COBRA Premium Reduction Extension 
FAQs on Health Care Reform and COBRA