Health coverage can continue after layoff
By DEBORAH STAYMAN
PEF is fighting hard against the threat of state layoffs, but it wants to reassure any members who may be worried about losing their jobs that they still could maintain their health benefits for quite a while.

That’s because provisions of the state Civil Service Law (CSL) and federal stimulus funding create a health care safety net for laid-off workers.

If you’re laid-off by the state and your name is placed on a state Department of Civil Service (DCS) “preferred list” for re-employment, you may continue health insurance coverage for you and your covered dependents under preferred-list provisions.

If you are not eligible to go on a preferred list for re-employment, you still may continue your health insurance coverage under preferred-list provisions if:
• You are in the noncompetitive class with tenure under CSL Section 75; or
• Your appointment was permanent.
However, you are not eligible if your appointment was a provisional or temporary appointment.

How it works
The preferred-list provisions allow you to continue paying only your employee’s share of your health insurance premium, including prescription drug coverage, for up to one year. The state must continue to pay the employer’s share for that same time.

Dental and vision benefits are not included under preferred-list coverage. However, you may choose to continue them under COBRA, (the federal continuation of coverage law). The new federal “stimulus” bill – the American Recovery and Reinvestment Act of 2009 (ARRA) – provides funds to help you pay COBRA premiums to continue your dental and vision benefits and your covered dependents if you are involuntarily laid-off between September 1, 2008, and December 31, 2009.

Other options
If you’re not eligible for preferred-list coverage or it runs out, you may be eligible to continue health coverage as a retiree vestee, under COBRA, or under a direct-pay conversion contract.

For more specific information regarding continuing coverage after layoff, ask your agency health benefits administrator for the flyer called, “For Employees of New York State Agencies Affected by Layoff: Health Insurance Coverage and Related Benefits.” This flyer is also posted on the PEF Web site under “Contract Resource Center.”

Reduced COBRA premiums
Extending health coverage under COBRA can be very expensive because you would usually be stuck with paying the full premium. Not this time.

If you are involuntarily laid-off between last September 1 and the end of this year, the ARRA provides help paying your COBRA premiums. This applies to your medical and prescription drug coverage if you’re not eligible for the preferred-list coverage. And even if you are getting preferred-list medical and Rx benefits, the ARRA can reduce your cost for extending dental and vision benefits under COBRA.

The ARRA reduces your share of the COBRA premiums to just 35 percent. Your employer must pay the remaining 65 percent and can be reimbursed for it through a federal tax credit.

If you are not eligible for preferred-list coverage and you lose coverage between April 18 and December 31 of this year, you will receive a COBRA notice that includes information about the ARRA COBRA premium assistance program.

What about HCSA?
If you are enrolled in the Health Care Spending Account (HCSAccount) and think you may be laid-off this year, check on your unspent balance. You may want to start using it up more quickly. Ordinarily, you lose any money left in your HCSAccount when you leave employment.

If you are laid-off, your HCSA eligibility period ends based on the date of your last payroll deduction, rather than your last day of employment.
 
If your employment ends and you receive checks for vacation accruals and the separation lump-sum payment in the pay periods immediately following your last regular paycheck, your eligibility to be reimbursed from your HCSAccount is extended through the date of the last deduction taken.

If your HCSA reimbursements exceed your contributions at the time, you are not required to refund the overpayment. However, if you still have any money left in HCSA when your eligibility ends, you will lose that money.

You can use COBRA specifically to extend your HCSA eligibility for up to the remainder of the plan year. Since COBRA is billed on a monthly basis, each COBRA premium payment you make extends your HCSA eligibility period by one month.

COBRA premiums for HCSA are based on the following formula:
• Subtract the amount you already have deposited from your annual commitment;
• Divide the remainder by the number of months left in the plan year to get your basic monthly premium; then
• Add a 2 percent COBRA fee to each monthly premium.

For example, assume you have committed to deposit $1,000 to your HCSAccount in 2009, and your total deposits equal $500 when you are laid-off at the end of June.

To continue your HCSAccount for the remainder of the year under COBRA you would deposit the remaining $500 in monthly amounts of $83.33 plus the 2 percent COBRA fee of $1.67, for a total monthly cost of $85.

The ARRA does not reduce the cost of extending HCSAccounts. For more information about this, call 1-800-358-7202 or go online to fsa@goer.state.ny.us.

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