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THE COBRA SUBSIDY AND THE ARRA: NEW INFORMATION AND TRION’S NEXT STEPS FOR IMPLEMENTATION

THE COBRA SUBSIDY AND THE ARRA: NEW INFORMATION AND TRION’S NEXT STEPS FOR IMPLEMENTATION

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Page 1: THE COBRA SUBSIDY AND THE ARRA: NEW INFORMATION AND TRION’S NEXT STEPS FOR IMPLEMENTATION

THE COBRA SUBSIDY AND THE ARRA: NEW INFORMATION ANDTRION’S NEXT STEPS FOR IMPLEMENTATION

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©2009 Trion. All Rights Reserved.

WELCOME

Trion Webinar - March 19, 2009

Trion Speakers:

• Nancy Ciganik, Compliance Manager

• Frank Dallago, Director, COBRA Administration

• Jerry McGlone, Client Leader

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©2009 Trion. All Rights Reserved.

AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009

TODAY’S AGENDA

• American Recovery and Reinvestment Act of 2009

• Amount and Duration of the Premium Assistance / COBRA Subsidy

• Eligibility and Enrollment Provisions

• Notification Requirements

• Sample Notices

• Method of Employer Reimbursement

• Additional Administrative Provisions

• Timeline / Next Steps

• Trion Contact Information

• Question and Answer Session

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©2009 Trion. All Rights Reserved.

QUESTION AND ANSWER DIALOGUE AT END OF WEBINAR

• At the end of this presentation, at approximately 2:00 p.m. EDT, we will answer questions. To facilitate the Q & A process, please click on the chat panel on the bottom right section of your screen.

• The Q & A session will be audio only and we will address as many questions as we have time to answer.

• Within one week of this webinar, a document answering ALL questions will be posted to the Trion COBRA website.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

American Recovery and Reinvestment Act of 2009 (ARRA)• Effective date – February 17, 2009.• Government provided subsidy of 65% of the COBRA premium.• Applies to all plans subject to continuation coverage other then Health

Flexible Spending Accounts (Examples – medical, dental, and vision plans).

• Continuation coverage can be federal COBRA or state mini-COBRA laws.

• The DOL issued model notices earlier today.• Expecting additional IRS regulatory guidance to be released.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

AMOUNT AND DURATION OF THE SUBSIDY

• Government provided subsidy of 65% of the COBRA premium.

– Requires individual to pay 35% of the COBRA premium (employer pays 65%, and seeks reimbursement from federal government through payroll tax credit).

• Subsidy applies to periods of COBRA coverage beginning on or after February 17, 2009 (i.e., begins with March COBRA premiums for most plans).

• Lasts a maximum of nine months (subsidy ends sooner if the COBRA coverage period expires or individual is no longer eligible).

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THE COBRA SUBSIDY

ELIGIBILITY AND ENROLLMENT PROVISIONS• Only Assistance Eligible Individuals (AEIs) are eligible for the subsidy – those

individuals who:– are eligible for COBRA continuation coverage at any time between

September 1, 2008, and December 31, 2009, because of “involuntary termination” of employment that occurred during that time period; and

– elect COBRA continuation coverage.• No “reach-back” coverage begins with first period of coverage on or after

February 17, 2009.

KEY DEFINITION• Involuntary termination - employees who are terminated by employer action

(other than for gross misconduct). If an individual is terminated for gross misconduct, s/he is not eligible for COBRA coverage.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

ELIGIBILITY AND ENROLLMENT PROVISIONS

• Existing AEIs

– Eligible AEIs who are currently enrolled in COBRA coverage.

– Must be notified of availability of subsidy under the ARRA.

– NOTE: The DOL sample notice released today provides an election form for existing AEIs.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

ELIGIBILITY AND ENROLLMENT PROVISIONS

• SECOND CHANCE COBRA ELECTION OPPORTUNITY– For individuals who would be AEIs, but

• did not elect COBRA when offered the first time, or • no longer are enrolled in COBRA.

– Individuals may elect COBRA coverage to begin upon enactment of ARRA, and end no later than the expiration of the maximum COBRA period (measured from the involuntary termination of employment date/loss of coverage).

– Individuals must elect coverage within 60 days from the date of notice of the “second chance” to elect COBRA.

– No pre-existing condition exclusion problems related to gap in coverage for AEIs who elect COBRA pursuant to ARRA.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

TO DO• Identify all involuntarily terminated employees with a qualifying event date

beginning September 1, 2008, up to a current date and notify your benefits administrator/broker - or whomever handles your COBRA administration.

• Employers will need to establish a method for identifying involuntary terminations on a “go forward” basis through at least December 31, 2009.

• Many employers have not had the necessity to track reason for termination and their internal systems may not currently accommodate the recording of that information.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

TRION’S PLANS AND ACTIONS

NEW CLIENTS• March 23 – Trion will provide clients new to Trion’s COBRA Administration

(clients with an effective date for Trion Administration of October 1, 2008, to March 1, 2009) with a standard spreadsheet file for use in working with their prior administrator or internal systems to obtain a complete list of COBRA qualified beneficiaries. This file will be delivered via email with instructions.

EXISTING CLIENTS• March 30 – Trion will provide a list to all active COBRA clients containing

COBRA terminations with a qualifying event date of September 1, 2008, to March 29, 2009.

– COBRA Link will be updated to include a termination reason code.– All clients submitting census files to Trion will be required to supply

termination reason codes either as part of the file process or through a separate submission.

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THE COBRA SUBSIDY

IMPORTANT LIMITATIONS ON ELIGIBILITY FOR SUBSIDY• Eligibility terminates if AEI is eligible for coverage under any other group health

plan or Medicare.• AEIs must notify group health plan in writing if/when s/he becomes eligible for

other group health plan or Medicare coverage, or else 110% penalty.• Eligibility is limited or eliminated for high income individuals (phased out for

those with individual/joint annual income of at least $125,000/$250,000 and eliminated at $145,000/$290,000).

• Possible written waiver for high-income individuals.

REVIEW OF PREMIUM ASSISTANCE DENIALS• The DOL will conduct expedited review of cases where individuals request

treatment as AEIs and are denied.• Individuals will apply to DOL for review and DOL will make eligibility

determinations within 15 business days.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

PERMITTING CHANGE TO LOWER COST HEALTH CARE PLAN (OPTIONAL)

• Ordinarily, COBRA continuation coverage is the level and type of coverage in effect on the day preceding the COBRA qualifying event.

• Now, employers may (but need not) permit AEIs to change coverage to a lower (or same) cost health care plan option, so long as:

– AEI makes election within 90 days of notice;– Option elected is also available to active employees (and is not dental,

vision or EAP only, health FSA or employer on–site medical facility); and– Premium is less than or equal to coverage in effect upon qualifying event.

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©2009 Trion. All Rights Reserved.

THE COBRA SUBSIDY

TO DO• Determine if the lower cost health care plan option will be offered.

TRION’S PLANS AND ACTIONS• Due to the administrative complexities of offering the alternative coverage

election, Trion is not recommending plan sponsors provide this option to AEIs.

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©2009 Trion. All Rights Reserved.

NEW COBRA NOTICE REQUIREMENTS

NEW GENERAL NOTICE REQUIREMENT• Notice of subsidy availability.• Notice must be provided:

– Within 60 days of enactment of ARRA (or during regular COBRA notice timeframe);– To all qualified beneficiaries eligible to elect COBRA continuation coverage during the

subsidy period – regardless of the type of qualifying event.• DOL sample notices:

– “Full Version” of the DOL model notice includes information on the premium reduction as well as information required in a COBRA election notice.

– “Abbreviated Version” of the DOL model notice may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after September 1, 2008, and elected COBRA coverage and are currently enrolled.

– These notices are for plans subject to the Federal COBRA provisions.• Link to the DOL sample notices is available at http://www.trion.com/cobra/

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©2009 Trion. All Rights Reserved.

NEW COBRA NOTICE REQUIREMENTS

NEW “SECOND CHANCE” NOTICE REQUIREMENT• Notice of second chance enrollment opportunity.• Notice must be provided:

– Within 60 days of enactment of ARRA;– To potential AEIs only who had a qualifying event date from September 1, 2008, through

February 16, 2009 (those who were entitled to elect COBRA before, but do not have coverage on February 17, 2009);

– Notice must include specific requirements.• DOL sample notice:

– “Notice in Connection with Extended Election Periods” – this DOL model notice includes information on ARRA’s additional election opportunity, as well as premium reduction information.

– These notices are for plans subject to the Federal COBRA provisions.• This notice must be provided by April 18, 2009.• Link to the DOL sample notices is available at http://www.trion.com/cobra/

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©2009 Trion. All Rights Reserved.

SAMPLE NOTICES

• SUMMARY OF THE COBRA PREMIUM REDUCTION PROVISIONS UNDER ARRASummary of the COBRA Premium Reduction Provisions under ARRA

President Obama signed the American Recovery and Reinvestment Act (ARRA) on February 17, 2009. The law gives “Assistance Eligible Individuals” the right to pay reduced COBRA premiums for periods of coverage beginning on or after February 17, 2009 and can last up to 9 months. To be considered an “Assistance Eligible Individual” and get reduced premiums you:

MUST be eligible for continuation coverage at any time during the period from September 1, 2008 through December 31, 2009 and elect the coverage;

MUST have a continuation coverage election opportunity related to an involuntary termination of employment that occurred at some time from September 1, 2008 through December 31, 2009;

MUST NOT be eligible for Medicare; AND MUST NOT be eligible for coverage under any other group health plan, such as a plan sponsored by a

successor employer or a spouse’s employer.

Individuals who experienced a qualifying event as the result of an involuntary termination of employment at any time from September 1, 2008 through February 16, 2009 and were offered, but did not elect, continuation coverage OR who elected continuation coverage and subsequently discontinued it may have the right to an additional 60-day election period.

IMPORTANT

◊ If, after you elect COBRA and while you are paying the reduced premium, you become eligible for other group health plan coverage or Medicare you MUST notify the plan in writing. If you do not, you may be subject to a tax penalty.

◊ Electing the premium reduction disqualifies you for the Health Coverage Tax Credit. If you are eligible for the Health Coverage Tax Credit, which could be more valuable than the premium reduction, you will have received a notification from the IRS.

◊ The amount of the premium reduction is recaptured for certain high income individuals. If the amount you earn for the year is more than $125,000 (or $250,000 for married couples filing a joint federal income tax return) all or part of the premium reduction may be recaptured by an increase in your income tax liability for the year. If you think that your income may exceed the amounts above, you may wish to consider waiving your right to the premium reduction. For more information, consult your tax preparer or visit the IRS webpage on ARRA at www.irs.gov.

For general information regarding your plan’s COBRA coverage you can contact [enter name of party responsible for COBRA administration for the Plan, with telephone number and address]. For specific information related to your plan’s administration of the ARRA Premium Reduction or to notify the plan of your ineligibility to continue paying reduced premiums, contact [enter name of party responsible for ARRA Premium Reduction administration for the Plan, with telephone number and address]. If you are denied treatment as an “Assistance Eligible Individual” you may have the right to have the denial reviewed. For more information regarding reviews or for general information about the ARRA Premium Reduction go to:

www.dol.gov/COBRA or call 1-866-444-EBSA (3272

Generally, this does not include coverage for only dental, vision, counseling, or referral services; coverage under a health flexible spending arrangement; or treatment that is furnished in an on-site medical facility maintained by the employer.

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©2009 Trion. All Rights Reserved.

SAMPLE NOTICES

• REQUEST FOR TREATMENT AS AN ASSISTANCE ELIGIBLE INDIVIDUAL

To apply for ARRA Premium Reduction, complete this form and return it to us along with your Election Form.

You may also send this form in separately. If you choose to do so, send the completed “Request for Treatment as an Assistance Eligible Individual” to: [Enter Name and Address]

You may also want to read the important information about your rights included in the “Summary of the COBRA Premium Reduction Provisions Under ARRA.”

[Insert Plan Name] REQUEST FOR TREATMENT AS AN ASSISTANCE ELIGIBLE INDIVIDUAL

[Insert Plan Mailing Address]

PERSONAL INFORMATION Telephone number Name and mailing address of employee (list any dependents on the back of

this form)

E-mail address (optional)

To qualify, you must be able to check ‘Yes’ for all statements.* 1. The loss of employment was involuntary. Yes No 2. The loss of employment occurred at some point on or after September 1, 2008 and on or before December 31, 2009. Yes No

3. I elected (or am electing) COBRA continuation coverage.* Yes No

4. I am NOT eligible for other group health plan coverage (or I was not eligible for other group health plan coverage during the period for which I am claiming a reduced premium).

Yes No

5. I am NOT eligible for Medicare (or I was not eligible for Medicare during the period for which I am claiming a reduced premium).

Yes No

*If you checked NO for statement 3, you may still be eligible. See below for more information.

*ADDITIONAL ELECTION PERIOD*

If your COBRA continuation coverage relates to an involuntary loss of employment from September 1, 2008 through February 16, 2009 and you were eligible for, but did not elect, COBRA continuation coverage OR you elected but subsequently discontinued COBRA, you may have the right to an additional 60-day election period. You should receive a new election notice with an Election Form which you MUST complete and return. If you believe you should have received this additional notice but have not, contact [enter name of party responsible for COBRA administration for the Plan, with telephone number and address].

I make an election to exercise my right to the ARRA Premium Reduction. To the best of my knowledge and belief all of the answers I have provided on this form are true and correct. Signature __________________________________________________ Date ____________________________ Type or print name __________________________________________ Relationship to employee _________________________

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©2009 Trion. All Rights Reserved.

SAMPLE NOTICES

• PARTICIPANT NOTIFICATION OF INELIGIBILITY OF

Use this form to notify your plan that you are eligible for other group health plan coverage or Medicare and therefore not eligible for reduced premiums under ARRA.

Plan Name Participant Notification

Plan Mailing Address

PERSONAL INFORMATION Telephone number Name and mailing address

E-mail address (optional)

PREMIUM REDUCTION INELIGIBILITY INFORMATION – Check one I am eligible for coverage under another group health plan. If any dependents are also eligible, include their names below.

Insert date you became eligible______________________

I am eligible for Medicare.

Insert date you became eligible______________________

IMPORTANT If you fail to notify your plan of becoming eligible for other group health plan coverage or Medicare AND continue to pay reduced COBRA premiums you could be subject to a fine of 110% of the amount of the premium reduction.

Eligibility is determined regardless of whether you take or decline the other coverage.

However, eligibility for coverage does not include any time spent in a waiting period.

To the best of my knowledge and belief all of the answers I have provided on this Form are true and correct. Signature __________________________________________________ Date ____________________________ Type or print name _____________________________________________________________________________

If you are eligible for coverage under another group health plan and that plan covers dependents you must also list their names here:

This form is designed for plans to distribute to COBRA qualified beneficiaries who are paying reduced premiums pursuant to ARRA so they can notify the plan if they become eligible for other group health plan coverage or Medicare.

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SAMPLE NOTICES

• FORM FOR SWITCHING BENEFIT OPTIONS coverage that is different than coverage in which the individual was enrolled at the time the qualifying event occurred.] Form for Switching COBRA Continuation Coverage Benefit Options

I (We) would like to change the COBRA continuation coverage option(s) in the [enter name of plan] (the Plan) as indicated below: Name Date of Birth Relationship to Employee SSN (or other identifier)

a. _________________________________________________________________________

Old Coverage Option: ____________________________

New Coverage Option: __________________________

b. _________________________________________________________________________

Old Coverage Option: ____________________________

New Coverage Option: __________________________

c. _________________________________________________________________________

Old Coverage Option: ____________________________

New Coverage Option: __________________________

_____________________________________ _____________________________ Signature Date ______________________________________ _____________________________ Print Name Relationship to individual(s) listed above

______________________________________

______________________________________

______________________________________ ______________________________ Print Address Telephone number

Instructions: To change the benefit option(s) for your COBRA continuation coverage to something different than what you had on the last day of employment, complete this form and return it to us. Under federal law, you have 90 days after the date of this notice to decide whether you want to switch benefit options. Send completed form to: [Enter Name and Address] This form must be completed and returned by mail [or describe other means of submission and due date]. If mailed, it must be post-marked no later than [enter date].

*THIS IS NOT YOUR ELECTION NOTICE* YOU MUST SEPARATELY COMPLETE AND RETURN THE ELECTION NOTICE TO SECURE

YOUR COBRA CONTINUATION COVERAGE.

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©2009 Trion. All Rights Reserved.

NEW COBRA NOTICE REQUIREMENTS

TO DO

• The DOL provided sample COBRA model notice that contains the information necessary to comply with the new notification requirements.

• You may rely on the model DOL notice or create your own while incorporating the required language.

• If your company provides payment coupons, all active qualified beneficiaries need to be issued new coupons once they are have been identified as premium subsidy eligible.

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NEW COBRA NOTICE REQUIREMENTS

TRION’S PLANS AND ACTIONS• While it was possible to create and issue qualifying event notices based on the

initial legislation, Trion determined that it was best for our clients to wait for the DOL’s new model notice. This ensures that all necessary information is included in the notice in an approved format.

• Trion is working on solutions to accomplish the billing requirements contained in the Premium Assistance for COBRA Benefits.

• Trion will begin issuing new qualifying event notices for those COBRA eligible and designated as involuntary terminations as received. The mailing date of these notice will be March 31 through April 17.

• New payment coupons will also be generated for those active COBRA Beneficiaries who have been designated as involuntary terminations.

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HOW TO CALCULATE AND GET REIMBURSED

• Calculate the 35% subsidized premium based on the COBRA premium amount actually charged to COBRA participants (not the amount of the group healthcare plan premium).

• After the COBRA participant pays the 35%, apply the 65% amount of COBRA premium paid by the employer as a credit against payroll taxes owed by the employer on IRS Tax Form 941.

• Satisfy IRS reporting requirements for reimbursement:– attestation of involuntary termination;– amount of subsidy claimed;– estimated amount of subsidy for the next reporting period;– SSNs of employees receiving subsidy, amount of subsidy reimbursed, and

whether coverage was for employee, employee +1/2, or family.

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HOW TO CALCULATE AND GET REIMBURSED

TO DO• Employers must calculate the 65% subsidy based on the COBRA premium

charged to, and paid by, the AEI. • In order for employers to be reimbursed for premium subsidies, monthly COBRA

activity reporting must be enhanced to capture and report on the premium subsidy activity.

• The employer will be required to provide the Internal Revenue Service with some level of detail with filings of their 941 forms.

TRION’S PLANS AND ACTION• Trion is preparing enhancements to the reporting capabilities of its COBRA

platform. • We expect to have the reporting requirements clarified and programmed in

advance of any premium subsidy payments.

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©2009 Trion. All Rights Reserved.

TRANSITION RULE

REFUNDING OVERPAYMENT OF PREMIUMS• If AEI pays full COBRA premium (rather than 35% subsidized amount) for the

first or second premium coverage period following enactment of ARRA, employers must either:

– Refund the AEI for the amount of overpayment (i.e., 65% of the premium paid) within 60 days, or

– Issue a credit to the AEI in the amount of the overpayment to be applied to future COBRA premiums owed by the AEI (but this is permitted only so long as it is reasonable to believe the credit will be used within 180 days from payment of the full premium).

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TRANSITION RULE

TO DO• Determine if a refund will be issued for the overpayment amount received during

the transition period or to issue a credit toward future premiums.

TRION’S PLANS AND ACTION• Trion is implementing processes to calculate and provide a credit to any AEI

who made an overpayment of their COBRA premiums.• For those AEIs that are unable to use the full credit prior to the termination of

COBRA coverage will receive a refund.

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TIMELINE REVIEW

COBRA subsidy• September 1, 2008 through December 31, 2009 – subsidy eligibility period.• March 19 – DOL model notification due.

Existing AEIs • April 18 – Notification deadline to all existing AEIs with revised payment coupons (if

utilized).

Second Chance Enrollment Opportunity AEIs• April 18 – Notification deadline to all AEIs eligible for the second chance enrollment

option. • June 17 – AEIs who elect coverage under the second chance enrollment option have 60

days from notification to elect coverage.• July 31 – AEIs who elect COBRA under the second chance enrollment option have up to

45 days to submit initial payment.

AEIs eligible for subsidy on March 1• November 30 – 9 month subsidy period ends.

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TRION COBRA ADMINISTRATION COMMUNICATION TIMELINE REVIEW

NEW CLIENTS• March 23 – Trion will provide clients new to Trion’s COBRA Administration

(clients with an effective date for Trion Administration of October 1, 2008 to March 1, 2009) with a standard spreadsheet file for use in working with their prior administrator or internal systems to obtain a complete list of COBRA qualified beneficiaries. This file will be delivered via email with instructions.

EXISTING CLIENTS• March 30 – Trion will provide a list to all active COBRA clients containing

COBRA terminations with a qualifying event date of September 1, 2008 to March 29, 2009.

– COBRA Link will be updated to include a termination reason code.– All clients submitting census files to Trion will be required to supply

termination reason codes either as part of the file process or through a separate submission.

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TRION COBRA ADMINISTRATION COMMUNICATION TIMELINE REVIEW

SUBMISSION DEADLINES April 10 – deadline for submitting termination reason for COBRA terminations

with a qualifying event date of September 1, 2008 to March 29, 2009 April 17 – Clients are required to have updated census files containing the

termination reason code.

MAILING OF NEW NOTICES March 31 to April 17 – Trion will begin issuing new qualifying event notices for

those COBRA eligible and designated as involuntary terminations as received. New payment coupons will also be generated for those active COBRA

Beneficiaries who have been designated as involuntary terminations.

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TRION’S CLIENT RESOURCES

Trion has established numerous resources to further assist clients and address their questions and concerns:

COBRA hotline – 610.945.1173 – We have established a toll free COBRA hotline for you to call and personally speak

with a COBRA expert.

Directly routed email address - [email protected] – We have established an email address that feeds directly to an internal Trion COBRA

expert to answer your questions and meet your concerns.

Designated COBRA webpage - http://www.trion.com/cobra/– Trion’s has established a webpage specifically designated for COBRA which will

house a library of relevant information around the new legislation. This information includes, but is not limited to, a FAQ section and a copy of the Federal legislation with guidance regarding how it will impact you as an employer.

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QUESTION AND ANSWER DIALOGUE AT END OF WEBINAR

• At this time, we will answer questions. To facilitate the Q & A process, please click on the chat panel on the bottom right section of your screen.

• The Q & A session will be audio only and we will address as many questions as we have time to answer.

• Within one week of this webinar, a document answering ALL questions will be posted to the Trion COBRA website.