New Law Creates Special Election Period for NC State Continuation Coverage
On June 8, 2009, Governor Perdue signed Senate Bill 957 to create a special enrollment period for NC State Continuation coverage, allowing individuals a second opportunity to elect the coverage and receive premium assistance. Prior to the passage of this bill, only individuals who were either enrolled in state continuation coverage or were still eligible to elect state continuation coverage were eligible for the premium subsidy initiated by the American Recovery and Reinvestment Act of 2009 (ARRA), as reported in the Compliance Alert dated February 18, 2009.
ARRA Premium Subsidy Background
Under ARRA, an assistance eligible individual (AEI) is defined as a qualified beneficiary who:
- Is eligible for continuation coverage at any time on or after September 1, 2008, and on or before December 31, 2009; and
- Is a covered employee who has been involuntarily terminated from employment for reasons other than for gross misconduct on or after September 1, 2008, and on or before December 31, 2009, OR a covered employee’s spouse or dependent who is a qualified beneficiary because of the involuntary termination of the employee’s employment; and
- Elects continuation coverage during either (1) the original election period or (2) the special election period provided by ARRA.
The special election period provided by ARRA is only applicable to plans sponsored by employers subject to COBRA. However, state legislatures can provide a special election period for plans subject to state continuation or “mini-COBRA” laws. According to the Society for Human Resource Management, as of June 3, 2009, the District of Columbia and 16 states have passed laws allowing special election periods (California, Connecticut, Georgia, Kansas, Kentucky, Maryland, Minnesota, New Hampshire, New Jersey, New York, Oregon, Rhode Island, South Dakota, Utah, Virginia, and West Virginia). Since then, Vermont has also passed a law allowing a special election period and a similar bill is awaiting the governor’s signature in Texas.
With the passage of this law, the North Carolina General Assembly provided a second opportunity to elect state continuation coverage to employees in North Carolina who:
- experienced an involuntary termination on or after September 1, 2008; and
- did not have an election of state continuation in effect on June 8, 2009, but would be an AEI if an election were in effect.
Notice Required
Plan Administrators (or other entities involved) are obligated to provide notice of this special election period to all potential AEIs by August 7, 2009 (or within 60 days from June 8, 2009).
Employee Election and Coverage
Employees will have 60 days to elect state continuation coverage from the date the required notice is provided. Coverage elected during this time frame will commence with the first period of coverage beginning on or after June 8, 2009. NOTE: This special election opportunity does not extend the period of state continuation coverage beyond the original 18-month maximum period calculated from the date of the original qualifying event.
The period beginning from the original qualifying event date and ending on the first day of the state continuation coverage period beginning after the June 8, 2009 is disregarded when determining if the AEI had a 63-day significant break in coverage for purposes of applying the pre-existing conditions exclusion.
To access a copy of Senate Bill 957 (now Session Law 2009-62), please click here. Should you have additional questions regarding the NC State Continuation special election period, please contact our office at (919) 403-1986.
Important Notice: Hill, Chesson & Woody does not engage in the practice of law, accounting, or medicine. Therefore, the contents of this communication should not be regarded as a substitute for legal, tax, or medical advice.
June 18, 2009
Hill, Chesson & Woody Employee Benefit Services
194 Finley Golf Course Rd, Suite 200,
Chapel Hill, NC 27517
Phone: 919.403.1986
Fax: 919.869.2063
www.hcwbenefits.com