New Criminal Precedent for Physicians Over-Prescribing Opioid Drugs

In October of 2015, a jury convicted a physician of second degree murder for over-prescribing a drug that resulted in a fatal overdose for three patients. People v. Tseng is the first conviction of a physician for murder due to over-prescribing, but the Centers for Disease Control and Prevention note that physicians are a significant contributor to the 17,000 plus opioid overdose deaths a year.

After the conviction, in February of 2016, Dr. Tseng was sentenced to 30 years to life in prison for the fatalities due to over-prescription. Although this was the first conviction of its kind, the prosecution of physicians for reckless or intentional over-prescription of certain types of drugs is significantly increasing. An example of the new focus, early in 2016, the White House proposed a $1.1 billion initiative to combat the prescription opioid and heroin use problem.

In the Tseng conviction, the physician had prior incidents of over-prescribing and all three individuals purposefully sought her out for the prescriptions. While she maintains that she was relatively untrained in opioid based prescriptions, thus leading to the over-prescribing, she is not eligible for parole for 30 years.

© 2015 Vandenack Williams LLC
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Final rule on Medicaid Prescription Drug Programs

In January of 2016, the Centers for Medicare and Medicaid Services (CMS) issued a final rule on covered outpatient drugs. The rule changes the Medicaid Drug Rebate Program by the Patient Protection and Affordable Care Act (PPACA) and the overall Medicaid drug reimbursement program.  These changes have several goals, including reducing the cost to the federal and state governments and improving beneficiary access to covered outpatient drugs.

CMS claims the changes implemented will help the government save money in the Medicaid Drug Rebate Program, which had been subject to sustainability issues. One key change in the final rule is a definition of the Average Manufacture Price, which in turn gets used to determine rebates and pharmacy reimbursements subject to the federal upper limit. Similarly, the changes to the federal upper limit formula will incentivize pharmacies to use certain generic drugs. The final rules clarify many of the ambiguous sections of the Medicaid Drug Rebate Program by the PPACA, including the manufacturer reporting requirements. The rule also aligns the pharmacy reimbursement system with the actual acquisition cost of the drug.

Overall, the new incentives and changes should improve the reimbursement system and help manage drug costs. This rule becomes effective April 1, 2016, although CMS is allowing comment for 60 days after publication on certain elements of the rule. The new rule can be found at the following link:

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Changes Coming to Meaningful Use

The government program providing incentives to health providers for meaningful use of electronic health records continues to be troubled as the final rule for stage 3  has been delayed until 2018. Coupled with recent comments by the Centers for Medicare and Medicaid Services (CMS), it appears that the entire program will undergo substantive changes in the year ahead. However, CMS notes, it is important to continue under the old program until the changes start being unveiled in the spring of 2016.

When meaningful use started in 2009, the intent was to induce medical providers to use the new technology purchased with the help of the federal government. By providing incentive payments to the physicians that showed they were using the new technology in a meaningful way, the government believed it would improve quality, safety, and efficiency of care through electronic health records. However, CMS has found that the program did not operate as envisioned, resulting in the forthcoming changes to the program, expected to start in the spring of 2016.

While the new program has guiding themes that were issued by CMS, it is unclear what the new program will ultimately look like. However, many of the themes are to focus on the outcome of patient care, with less focus on the use of the new technology, in hopes that complaints by all stakeholders about the meaningful use program will be alleviated. For health providers, the pending changes will take time implement and until such time, the meaningful use program is still the operative requirements. To read more about the changes, please visit the official blog of CMS at:

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Small Business Health Relief Act designed to repeal pieces of Health Care legislation

A recent bill introduced to Congress includes provisions that, if passed, result in repeal of certain PPACA (“Patient Protection and Affordable Care Act”)  provisions.  The bill repeals certain requirements dealing with shared responsibility for employers and requiring employer reporting of health insurance coverage.  The bill allows reimbursement for over the counter medication by repealing the PPACA provision prohibiting the same. The bill broadens grandfathered coverage and elminates annual caps on health FSA benefits imposed by PPACA.  Developments will be provided in follow up posts.

Practice Management Tips for Physicians

1.  Have Contracts with Third Parties Reviewed and Have a Policy about who is authorized to sign contracts.  Permit only managing physicians to sign contracts… of any kind. This is often overlooked on simple things like a new photocopier.  The receptionist signs a contract without realizing the ramifications.  No one reviews it. No one realizes the term of the agreement.   Some agreements require the practice to notify the vendor of termination to avoid an auto renewal.  Designate someone to know the details of the office lease, the leases for the office equipment and any and all such agreements.  Track renewal terms.   On at least a quarterly basis, review the list of contracts and determine how to handle any upcoming renewals.

2.  Exercise care in selecting retirement plan investment managers.  While many CPA firms do a great job in managing retirement plan assets, we advise practices to keep the practice accounting functions and the plan investment management separate.  Use an independent accountant who is paid for accounting services and not compensated for the sale of financial products to you. 

3.  Know exactly what you are paying to any and all advisors.  While many clients dislike the bills from hourly or flat fee advisors, at least it is clear how much you are paying.  Avoid giving into the psychology of feeling like you didn’t have to pay anything because a commission came off the top and you didn’t have to write a check. There is a reason for the shift to administrative and investment expenses being paid from  plans and/or off the top.  You pay more but you feel like you paid less. Always be clear about cost.   If you are writing a check for health insurance premiums, you are paying a commission.  Do you know how much it is? 

4.  Protect yourself from medical malpractice lawsuits.  Review your malpractice insurance for the best possible coverage.  Make yourself as judgment proof as possible.  Real estate, furniture and equipment should not be owned by the medical practice.  Use another entity to own valuable assets.  The assets can then be leased to the medical practice, making them less accessible to a malpractice claimant.  Each physician should engage in personal creditor protection planning.  If you are sued for medical malpractice, keep in mind that the attorney representing you works for and is paid by your insurance carrier.  Most of the time, that works well but there are circumstances where you should engage an independent lawyer.  At a minimum, keep the practice’s business lawyer in the loop on any medical malpractice suits.   Of course, the best protection is to adopt top notch practices and policies for risk management so that suits are avoided in the first place.

5.  Maintain and regularly review insurance coverage for the practice.  We often find clients do not have sufficient protection for such things as employee theft or unowned automobile liability.  Review and consider all optional coverages. 

6.  Adopt policies and procedures that ensure compliance with all applicable medical laws.  While it is likely not necessary to engage in an exorbitantly expensive compliance audit, periodic reviews of billing procedures, patient file documentation and third party financial arrangements should be conducted by a trusted advisor with appropriate skills and experience.   Consultants should be hired through your lawyer so that any reports provided stay as confidential as possible pursuant to the attorney client privilege.

7.  Review the practice compensation plan.  Be certain that the plan complies with Stark and all applicable regulatory rules.

8.  Review your malpractice insurance coverage and be certain that you are maintaining adequate limits.

9.  Review the structure of your retirement plan.  Physician plans can readily be designed in a way that avoids most testing requirements and reduces administration costs while allowing physicians to maximize their contributions to the plan.

10.  Review and update the agreements between the partners.  Unfinished or archaic agreements are a recipe for disaster when one of the group members experiences a life changing event.  What happens when a physician becomes disabled? Dies? Becomes a drug addict? Has an affair with a nurse?


© 2009 Parsonage Vandenack Williams LLC

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On April 7, 2009 CMS announced that, as a result of the incentive provisions for physicians to encourage the adoption of health information technology in the American Recovery and Reinvestment Act of 2009 (“ARRA”), CMS will change its plans for implementing the electronic health records (“HER”) Demonstration.  CMS will continue implementation of Phase I of the EHR Demonstration program on schedule.  CMS will continue working with Phase I community partners and practices, including local kick off meetings for more than 400 selected practices in May, 2009. The demonstration will begin as planned on June 1, 2009 and continue through May 21, 2014. However, CMS has decided to discontinue Phase II of the EHR demonstration, which originally was planned to begin operations in mid-2010.  



The EHR demonstration initiative aims to reward delivery of high-quality care supported by the adoption and use of electronic health records in physician practices. This initiative expands upon the foundation created by the Medicare Care Management Performance (“MCMP”) Demonstration. The goal of the demonstration is to foster the implementation and adoption of EHRs and health information technology (“HIT”) more broadly as effective vehicles to improve the quality of care provided and to transform the way medicine is practiced and delivered. 


As part of the EHR demonstration, all participating primary care physician practices will be required to have a Certification Commission for Healthcare Information Technology (“CCHIT”)-certified EHR by the end of the second year. (CCHIT is the recognized certification authority for EHRs and their networks.)  Physician practices must, as part of the demonstration, utilize the EHR to perform specific minimum core functionalities that can positively impact patient care processes, (e.g., clinical documentation, ordering of lab tests, recording lab tests, and recording of prescriptions).  The core incentive payment is based on performance on the quality measures, with an enhanced bonus based on the degree of HIT functionality used to manage care. 


On June 10, 2008 CMS announced its selection of 12 community partners in defined sites to help CMS implement the EHR demonstration. The approved community partners in each site represent diverse groups of organizations including varied HIT stakeholder collaborations, medical societies, primary care professional organizations and health departments. Phase I includes the following 4 sites: Louisiana, Southwest Pennsylvania, South Dakota (and some counties in bordering states), and Maryland and the District of Columbia. Recruitment of physician practices in the four Phase I sites was initiated on September 2, 2008, and the enrollment period closed on November 26, 2008. Over 800 eligible applications were received from interested practices in the four Phase I sites. 



© 2009 Parsonage Vandenack Williams LLC

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Many health care providers have been unaware of the Red Flag Rules or have been uncertain of the applicability of these requirements.  Under the Red Flag Rules, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs – or “red flags” – of identity theft.  Providers in general should be aware of the Red Flag Rules, should revisit their existing privacy and security compliance programs to ensure that the requirements of the Red Flag Rules have been addressed, and should take other actions to bring themselves into compliance with applicable requirements prior to the May 1, 2009 enforcement date.


Applicability to Health Care Providers


Under the Red Flag Rules, creditors that are subject to FTC enforcement under the Fair Credit Reporting Act (FCRA) with “covered accounts” must implement programs that identify, detect and respond to practices that could indicate identity theft.  Although opinions differ, it is likely that health care providers—whether they are for-profit or nonprofit—are subject to the Red Flag Rules because they (1) are creditors, (2) are subject to enforcement by the FTC under the FCRA, and (3) have “covered accounts.”

(1) Creditors. First, the Red Flag Rules apply to creditors.  A “creditor” is defined as any person or entity that regularly extends, renews, or continues credit.  The term “credit” means the right granted by a creditor to a debtor to defer payment of debt or to purchase services and defer payment for such services.  For health care providers, credit would result when, for instance, a health care provider grants a patient the right to defer payment for medical services rendered. Thus, a health care provider could be deemed a creditor because it “regularly extends, renews, or continues credit,” in the form of deferred payment for medical services, to patients and to others who utilize the health care provider’s services.

(2) Subject to FCRA enforcement.  The second step is to determine whether a health care provider is a creditor that is subject to the administrative enforcement of the FCRA by the FTC. An FCRA violation is enforced as a violation of the FTC Act.  Those subject to FCRA enforcement include any person, including a corporation, that violates the FCRA “irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests” of the FTC Act.  Thus, most “for profit” and “non-profit” health care providers are subject to FTC enforcement under the FCRA and, likewise, may be subject to the Red Flag Rules.

(3) Covered accounts.  Finally, the Red Flag Rules apply only to “covered accounts.” A covered account is defined broadly as (a) an “account … primarily for personal, family, or household purposes, that involves or is designed to permit multiple payments or transactions”; or (b) “[a]ny other account … for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the … creditor from identity theft.”  Health care providers’ patient accounts appear to qualify as covered accounts under both prongs of the definition: (1) patient accounts serve “personal” and/or “family” purposes because such accounts relate to medical services for individuals and/or family members and often involve or permit multiple payments or transactions; and (2) health care provider accounts, including patient financial accounts, present possibilities for identity theft.


Requirements of a Red Flag Program


The Red Flag Rules mandate that a covered entity’s program should detect, prevent and mitigate identity theft in connection with covered accounts and should include reasonable policies and procedures to accomplish the following:

·         Identify red flags. To identify red flags, health care providers should consider the types of accounts offered and maintained, the methods used to open and provide access to such accounts, any previous experience with identity theft, and any suspicious activity related to patient accounts.  Health care providers should pay particular attention to actual or reasonably likely instances of medical identity theft, which is a growing problem.

·         Detect red flags. To detect red flags, a health care provider should have a process to authenticate patients, monitor transactions and verify the validity of change-of-address requests. Such a process might include requiring patients to produce identifying information to verify their identity at the inception of the account and when they present for service.

·         Respond to red flags. To respond to red flags, covered entities must make “appropriate responses” that prevent and mitigate identity theft.  For health care providers, appropriate responses might include responding to identity theft alerts from law enforcement or others, monitoring patients’ covered accounts, contacting patients when questions or concerns arise, changing passwords or security codes, refraining from collecting on an account or selling it to a debt collector, or notifying law enforcement as appropriate.

·         Ensure the program is updated. Covered entities should ensure the program is updated to reflect changing risks to patients or the safety of the provider from identity theft and medical identity theft. Health care providers should update their program to adequately respond to alerts from law enforcement and others, changes in the methods of identity theft, changes in the methods to detect and prevent identity theft, and changes to the health care provider’s business infrastructure.

·         Obtain board approval. The covered entity’s board of directors (or an appropriate board committee) must approve the identity theft prevention program and, thereafter, be involved directly, or through a designated senior management employee, in the oversight, development, implementation and administration of the program. Additionally, covered health care providers must assign specific responsibility for implementation, train staff, audit compliance, generate annual reports, and oversee anyone granted access to covered accounts.

 Much like the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Red Flag Rules give covered health care providers some flexibility in implementing their identity theft programs, taking into account the size and complexity of a health care provider’s business. A program developed in compliance with the Red Flag Rules may be part of a provider’s HIPAA compliance efforts. There is certainly overlap between the requirements of HIPAA and the Red Flag Rules, and many of these actions may already have been included in an organization’s HIPAA compliance efforts.

  © 2009 Parsonage Vandenack Williams LLC 

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A Quick Overview of Covenants Not to Compete


In recent years, states have been split on the treatment of covenants not to compete in physician employment agreements. The vast majority of jurisdictions continue to apply a general “reasonableness’ standard often applied in other commercial contexts. Under a “reasonableness analysis, courts primarily look at two components of the restriction: (1) the time duration of the restriction; and (2) the geographic scope of the limitation. The greater the area covered and the time duration of the restriction on a physician’s ability to practice medicine, the greater the likelihood the entire covenant not to compete will be declared invalid. However, a growing minority of states have put further constraints on the enforceability of restrictive covenants in physician employment contracts. Three states, Colorado, Delaware and Massachusetts, have passed legislation that invalidates contractual provisions restricting a physician’s right to practice medicine after termination. 


Some states have also judicially tightened the restrictions on covenants not to compete in physician employment contracts. For example, the Supreme Court of Tennessee recently invalidated most restrictive covenants regarding physician employment contracts. The court noted that in Tennessee restrictive covenants are not allowed for attorneys because attorneys have an ethical duty to provide their services to the public, and to restrict to whom an attorney can provide services would be injurious to the public. The court then examined the doctor-patient relationship and noted that covenants not to compete were equally injurious in physician employment contracts. The court reasoned that covenants not to compete restrict a patient’s freedom of choice, restrict the patient’s right to maintain an ongoing relationship with a trusted physician, and result in the lost public benefit of having an increased number of available physicians practicing in the community. The court reasoned that an increased number of available physicians results in greater competition and a higher quality of care.


The harmful effects covenants not to compete can potentially create for patients have also been examined by the American Medical Association. The AMA has taken the view that “restrictive covenants are unethical if they are excessive in geographic scope or duration in the circumstances presented, or if they fail to make reasonable accommodation to a patient’s choice of physician.”


When drafting a covenant not to compete, or similar restrictions in an employment agreement for a physcian, the scope of the restrictions must be carefully considered as to prevent the terms of the agreement from being invalidated judicially. Attempt to provide too much protection to the remaining physicians and you may be left with no protection at all.



© 2009 Parsonage Vandenack Williams LLC 

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Ten Key Principles for Physicians Contracting with Third-Party Payors

  1.  Not signing an agreement can be okay.  Many practices and related endoscopy centers have gone bankrupt by signing contracts due to worrying that if they don’t sign, they will be left out of the network.  Physicians must understand the overall value of the contract.  When the reimbursement rates are below the cost, it is usually better not to sign and refrain from providing services to payors that are not profitable.© 2009 Parsonage Vandenack Williams LLC 

  2.  Do not sign agreements that are at a low rate just because it represents a small percentage of your business.  It is becoming more common for payors to rent their networks to other payors.  Practices may sign an unfavorable agreement without pause because it represents a small percentage of business, assuming it is not an important payor and trying to hastily get an agreement signed.  However, practices can later find out that they signed up for a contract that lowers their rate of reimbursement with other payors that are renting their network and, suddenly, the volume of business flowing through the rental network payor is much greater than expected at lower reimbursement rates.  Therefore, instead of just signing the agreement, it is better to not sign at all if it does not provide sufficient reimbursement.

 3.  Practices must understand which procedures drive 80% to 90% of their revenues.  In most practices, a small number of procedures and services generate the greatest percentage of revenues.  When negotiating agreements, efforts should be focused on these high-revenue-generating procedures and codes.  Do not get stuck on codes that represent low volume and may not be at desired rates of reimbursement if they can be used as leverage to negotiate high rates on the codes that represent the most volume.  Basically, you can give a lot on other codes if you focus mainly on these key codes that will increase the overall value of the agreement, resulting in increased levels of productivity.

 4.  Understand your revenues.  Each practice should understand what they are currently receiving in terms of revenues for each procedure.  Useful information systems and the ability to understand the current reimbursement per procedure is important for benchmarking expected reimbursement per procedure when entering into a new agreement.  If the overall net revenue per procedure turns out to be below the total cost per procedure, you may not want to sign the agreement.

 5.  Long-term vs. short-term agreement.  When an agreement provides for sufficient reimbursement, the practice should be better positioned to negotiate for long term agreements with escalators, such as two years, three years, five years, or more.  On the other hand, where reimbursement is not sufficient, the practice should look into entering a shorter terms agreement or no agreement whatsoever.

 6.  Understand what percentage of reimbursement will be paid by the payor versus the patient.  More often, payors are able to shift significant amounts of the payment rates to the patients.  Thus, increases in reimbursement increase the amount due from the patient.  Although on paper the agreement may look great, it may also require a lot more effort to make certain you are collecting from patients to insure that you actually see the increase that has been promised.

 7.  Withholds and quality bonuses can be toxic.  There has been talk of increased bonus opportunities based on quality.  But over the last 10 to 15 years, the experience of physicians was most universally bad with withholds and bonuses from payors.  Basically, payors did not pay must on withhold amounts, and bonuses were rarely if ever seen.

 8.  Cost control and understanding your costs is important.  It is very important that practices manage their own businesses extremely efficiently as reimbursement becomes tighter from payors and employers try to reduce provider costs.  Finding ways to reduce your costs and manage your own costs allows you to retain a greater percentage of the revenues and reimbursement.

 9.  Merging practices can solve problems reaching agreement.  Oftentimes, practices view merger situations as a way to allow themselves and another practice to operate together and thus take advantage of better managed care rates in one practice or the other.  Before agreeing to merge, practices need to really have a strong idea of whether or not this is likely to be successful.  For instance, is the payor likely to extend the rates from one practice to the other?  Lots of times, payors are no longer willing to just allow the second practice to tie into the payment rates of the first practice of the merged or surviving practice.

 10.  Utilizing your attorney.  Attorneys can help you handle your managed care contracts.  Some attorneys have great experience in this area and a very strong understanding of where a payor can move towards in terms of reimbursement for a practice.  It often makes sense to use an attorney when negotiating your managed care contracts.  The impact economically can be very substantial.


 © 2009 Parsonage Vandenack Williams LLC

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American Recovery and Reinvestment Act Includes COBRA Changes

The American Recovery and Reinvestment Act of 2009 (“ARRA”) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage starting on or after February 17, 2009 and lasts for up to nine months.


COBRA gives employees who lose their jobs, including their health benefits, the right to purchase group health coverage provided by the plan under certain circumstances.

If the employer continues to offer a group health plan, the employee and his or her dependants can keep their group health coverage for up to 18 months by paying group rates. The COBRA premium may be higher than what the individual was paying while employed, but in general, the cost is lower than that for private, individual health insurance coverage.

The plan administrator must notify affected employees of their right to elect COBRA. The employee and his or her dependants each have 60 days to elect the COBRA coverage, otherwise they lose all rights to COBRA benefits.

It is important to note that COBRA generally does not apply to plans sponsored by employers with less than 20 employees. However, many States (including Nebraska) have similar requirements for small plans providing benefits through an insurance company. The premium reduction is available for plans covered by these State laws.

Changes Regarding COBRA Continuation Coverage Under ARRA

Premium Reduction:  The premium reduction for COBRA continuation coverage is available to “assistance eligible individuals.”

An “assistance eligible individual” is the employee or a member of his or her family who:

·         is eligible for COBRA continuation coverage at any time between September 1, 2008 and December 31, 2009;

·         elects COBRA coverage; and

·         is eligible for COBRA as a result of the employee’s involuntary termination between September 1, 2008 and December 31, 2009.

Those who are eligible for other group health coverage (such as a spouse’s plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for premiums paid for periods of coverage prior to February 17, 2009.

ARRA treats assistance eligible individuals who pay 35 percent of their COBRA premium as having paid the full amount. The premium reduction (65 percent of the full premium) is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes. If the credit amount is greater than the taxes due, the Secretary of the Treasury will directly reimburse the employer, insurer or plan for the excess.

The premium reduction applies to periods of coverage starting on or after February 17, 2009. A period of coverage is a month or shorter period for which the plan charges a COBRA premium. The premium reduction starts on March 1, 2009 for plans that charge for COBRA coverage on a calendar month basis. The premium reduction for an individual ends upon eligibility for other group coverage (or Medicare), after 9 months of the reduction, or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must inform their plans if they become eligible for coverage under another group health plan or Medicare.

Special COBRA Election Opportunity:  Individuals involuntarily terminated from September 1, 2008 through February 16, 2009 who did not elect COBRA when it was first offered OR who did elect COBRA, but are no longer enrolled (for example because they were unable to continue paying the premium) have a new election opportunity. This election period starts on February 17, 2009 and ends 60 days after the plan provides the required notice. This special election period does not extend the period of COBRA continuation coverage beyond the original maximum period. COBRA coverage elected in this special election period begins with the first period of coverage beginning on or after February 17, 2009. Additionally, this special election period opportunity does not apply to coverage sponsored by employers with less than 20 employees that is subject to State law.

Notice: Plan administrators must provide notice about the premium reduction to individuals who have a COBRA qualifying event during the period from September 1, 2008 through December 31, 2009. Plan administrators may provide notices separately or along with notices they provide following a COBRA qualifying event. This notice must go to all individuals, whether they have COBRA coverage or not, who had a qualifying event from September 1, 2008 through December 31, 2009.

Individuals eligible for the special COBRA election period described above also must receive a notice informing them of this opportunity, which must be provided within 60 days following February 17, 2009.

Expedited Review of Denials of Premium Reduction: Individuals who are denied treatment as assistance eligible individuals and thus are denied eligibility for the premium reduction (whether by their plan, employer or insurer) may request an expedited review of the denial by the U.S. Department of Labor. The Department must make a determination within 15 business days of receipt of a completed request for review. The Department is currently developing a process and an official application form that will be required to be completed for appeals.

Switching Benefit Options: If an employer offers additional coverage options to active employees, the employer may (but is not required to) allow assistance eligible individuals to switch the coverage options they had when they became eligible for COBRA. To retain eligibility for the ARRA premium reduction, the different coverage must have the same or lower premiums as the individual’s original coverage. The different coverage cannot be coverage that provides only dental, vision, a health flexible spending account, or coverage for treatment that is furnished in an on-site facility maintained by the employer.

Income limits: If an individual’s modified adjusted gross income for the tax year in which the premium assistance is received exceeds $145,000 (or $290,000 for joint filers), then the amount of the premium reduction during the tax year must be repaid. For taxpayers with adjusted gross income between $125,000 and $145,000 (or $250,000 and $290,000 for joint filers), the amount of the premium reduction that must be repaid is reduced proportionately. Individuals may permanently waive the right to premium reduction but may not later obtain the premium reduction if their adjusted gross incomes end up below the limits.

Fact Sheet: COBRA Premium Reduction

U.S. Department of Labor

February 26, 2009

  © 2009 Parsonage Vandenack Williams LLC

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