This is the fourth issuance concerning premium assistance for eligible former Federal employees with temporary continuation of coverage as specified in Public Law 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA). It provides information on the implemention of premium assistance.

The United States Department of Agriculture’s (USDA) National Finance Center (NFC), which currently administers temporary continuation of coverage for almost all Federal agencies, will administer premium assistance for these former employees. NFC has requested the following information be provided by agencies.

For new enrollments and new opportunities to enroll, please provide:

For those enrollees already on TCC, please provide:

2) A copy of the ARRA election form requesting premium assistance.

NFC will issue coupons to new TCC enrollees beginning in May billing enrollees for 35% of their TCC premiums.

NFC will make adjustments to current TCC enrollees’ premiums in July, which will appear in the August 1 premium billing to enrollees. Enrollees will receive an offset to their accounts for any amounts paid over 35% of TCC premiums based on the effective date of their eligibility for premium assistance on or after February 17.

1. What is the definition of involuntary termination as it applies to TCC?

   For Federal employees, the term "involuntary separation" results when a manager identifies an employee for separation and the employing agency actually separates the employee from the workforce. The reason for the separation can determine whether or not the separated employee is eligible for TCC. Generally, an employee is eligible for TCC unless separated due to gross misconduct.

   The term "involuntary termination," as used in ARRA, includes an employee who is involuntarily separated from service, except if the termination is for "gross misconduct," as specified by the TCC statute, 5 USC 8905a(b)(1)(a), and implementing regulations. According to 5 CFR § 890.1102 Definitions, gross misconduct means a flagrant and extreme transgression of law or established rule of action for which an employee is separated and concerning which a judicial or administrative finding of gross misconduct has been made.

2. Are former executive and legislative branch employees eligible for premium assistance?

   Yes, a person who resigns in lieu of involuntary separation would be eligible for premium assistance if their FEHB coverage terminated and they were eligible for TCC. For example, if while an employee is serving under a Schedule C appointment or non-career SES appointment or in a similar position and it becomes known that the  Presidential appointee, whom the employee is subordinate to, is leaving, and the termination action is not covered under Rules 1-18 of the Guide to Processing Personnel Actions, and the employee submits a resignation notice in response to a written request from  the new incoming Administration, then the individual would be eligible for premium assistance. We recommend the action be coded with a NOAC 312 resignation in lieu of involuntary separation, and not a NOAC 317, resignation.  A person who resigns and is appropriately coded with a 312 NOAC would be eligible for premium assistance if their FEHB coverage terminated and they were eligible for TCC. In general, a separation that is coded with NOAC 317 would not be a separation that would make an individual eligible for premium assistance.  However, as discussed above, it is individual circumstances which should be evaluated for TCC and premium assistance.

3. May former employees who are already on TCC send a copy of the SF 2809 and premium assistance request form with their monthly coupon to NFC with their premium payment?

   No. Agencies are responsible for determining who is eligible for premium assistance. Individuals who are on TCC who have received payment coupons from NFC should make their premium payments, even though they are eligible for premium assistance. The premium assistance provisions apply only to premiums for periods of coverage beginning on or after February 17, 2009. If the employee was eligible for the assistance but paid in full for periods of TCC coverage after February 17, 2009, he or she should be made aware that NFC will provide for a premium credit against future payments (or a refund in certain circumstances.

4. What is the effective date of premium assistance?

   For former employees on TCC prior to February 17, the effective date of premium assistance is the first period of coverage beginning on or after February 17. 

   Example 1:  A federal employee’s last day of employment is December 4, 2008. He receives 31 days of free coverage, beginning December 7, the first day after the end of the pay period in which he is separated. His 31-day temporary extension of coverage ends January 7.  TCC begins on January 8 and he is charged a prorated premium for the remaining days in January. Thereafter, TCC is provided on a calendar month basis. Thus, the terminated employee has a full month of TCC coverage for February 2009.  March 1 is the effective date of premium assistance because March is the first period of coverage beginning on or after February 17, 2009, the date of enactment of ARRA.  See IRS guidance Q&A-31.

   The following examples show a separation date that is assumed to be the last day of a pay period for expediency:

   Example 2:  A federal employee’s last day of employment is January 3, 2009 and he receives 31 days of free coverage, beginning on January 4 and ending on February 4.  TCC begins on February 5 and he is charged a prorated premium for February.  Thereafter, TCC is provided on a calendar month basis.  March 1 is the effective date of premium assistance because March is the first period of coverage beginning on or after February 17, 2009, the date of enactment of ARRA.  See IRS guidance Q&A-30.

   For former employees not on TCC prior to February 17, the effective date of premium assistance is the first day of the month following the election of TCC unless the employee requests a retroactive enrollment with an effective date of March 1. 

   This applies to those individuals who are offered a second election opportunity under ARRA because they were offered TCC prior to the implementation of ARRA, and either declined to elect it or elected it and then discontinued it.

   Example:  A federal employee’s last day of employment is November 8, 2008.  He receives 31 days of free coverage, beginning on November 9 and ending on December 10.  He declines to elect TCC.  He is afforded a second election opportunity under ARRA.  He turns in his election on May 25. The effective date of premium assistance is June 1 (the first day of the month following the date that the former employing office receives the election of TCC), unless the individual requests a retroactive enrollment with an effective date of March 1. See IRS guidance Q&A-32.

   For employees who are first eligible for TCC on or after February 17 and who received notice of their premium assistance eligibility when they terminated, the effective date is the 32^nd day following the end of the pay period in which separation occurred.

   Example 1:  A federal employee’s last day of employment is January 17, 2009 and he receives 31 days of free coverage, beginning on January 18 and ending on February 18.  TCC begins on February 19 and he is charged a prorated premium for the period February 19 through February 28.  Thereafter, TCC is provided on a calendar month basis.  February 19 is the effective date of premium assistance because the period February 19 through February 28 is the first period of coverage beginning on or after February 17, 2009, the date of enactment of ARRA.  See IRS guidance Q&A-32.

   Example 2:  A federal employee’s last day of employment occurs in the pay period ending March 25. He receives 31 days of free coverage beginning on March 26 and ending on April 26. April 27 is the effective date of premium assistance. 

   For agencies that have already submitted documentation with premium assistance effective dates that do not meet the requirements of this guidance, NFC will change the effective dates to meet the guidance so that corrected coupons are generated in May.

5. What information relating to the premium assistance must be submitted to the Internal Revenue Service when claiming a payroll tax credit?

   No additional information relating to the subsidy is to be submitted with the Form 941, either electronically or in paper form. However, those claiming the credit must maintain supporting documentation for the credit claimed. Such documentation includes:

   • Information on the receipt, including dates and amounts, of the assistance eligible individuals’ 35% share of the premium.
   • In the case of an insured plan, copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA.
   • In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance eligible individuals.
   • Attestation of involuntary termination, including the date of the involuntary termination (which must be during the period from Sept. 1, 2008, to Dec. 31, 2009), for each covered employee whose involuntary termination is the basis for eligibility for the subsidy.
   • Proof of each assistance eligible individual’s eligibility for COBRA coverage at any time during the period from Sept. 1, 2008, to Dec. 31, 2009, and election of COBRA coverage.
   • A record of the SSN’s of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals.

   http://www.irs.gov/newsroom/article/0,,id=205376,00.html