Date: October 1, 2009
For more information contact: Jim Guidry, (608) 264-6239 or jim.guidry@wisconsin.gov

COBRA/Continuation emergency rules announced

Madison, WI—Wisconsin Governor Jim Doyle along with United States Representative Ron Kind and Insurance Commissioner Sean Dilweg announced that an emergency rule has been issued that will make federally subsidized health insurance available for employees and their families who are laid off when their employers go out of business. The Wisconsin Office of the Commissioner of Insurance ("OCI") issued an emergency rule to require insurers to continue group health insurance coverage for laid-off employees, and their families, even when their former employer goes out of business or otherwise discontinues group health coverage.

"This is very good news for Wisconsin families struggling with their health benefits," said Doyle. "Wisconsin families should not lose their chance to maintain health insurance coverage because employers have closed shop or can no longer afford to maintain employer-sponsored coverage."

Under both federal and state law a laid-off employee may elect to continue group health insurance coverage. However if the employer discontinues its business the group health insurance coverage for former employees is dropped. The federal American Recovery and Reinvestment Act of 2009 (ARRA) gave certain employees laid off before January 1, 2010 a 65% health insurance premium subsidy to help pay for 9 months of their former employer's group health insurance coverage.

If an employer goes out of business, however, the employer's health plan also disappears, leaving families uninsured. The emergency rule issued by OCI will have the effect of allowing laid-off employees to continue to receive the 65% premium subsidy under the federal American Recovery and Reinvestment Act of 2009 (ARRA) after their employer group health insurance policy terminates. The emergency rule will be retroactive to June 30, 2009 for employer group health insurance policies that were discontinued on or after that date. The federal premium subsidy and the emergency rule are temporary measures. The federal subsidy is not available for employees laid off after the end of the year.

"It was not the intent of Congress to make families in need of health insurance coverage lose access to the premium subsidy before exhausting their eligibility," said Rep. Kind. "Under the emergency rule, Wisconsin families will have access to health care coverage at a time when their income is most vulnerable."

The federal Centers for Medicare and Medicaid Services, US Department of Labor and the IRS have issued a "Frequently Asked Question" (FAQ) on their web site which indicates that a similar law in Rhode Island is eligible for the federal premium subsidy. "This federal guidance is sufficient to ensure the federal premium subsidy will be available for this program." said Dilweg. "Nevertheless Representative Kind is seeking specific assurance from the IRS."

"It's important that employers, insurance agents, and insurers step up to make sure that laid off employees are told about this chance to get federally subsidized continuation of their group health insurance coverage." Dilweg said. "The emergency rule requires them to assist laid off employees to obtain the benefits and I expect that they will be eager to get the word out."

This emergency rule is not applicable to employers who terminate self-funded health plans. The State can only require continued coverage for a group health insurance policy issued by an insurer. Federal law prevents OCI from doing the same for employer self-funded health plans.

Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.