American Recovery and Reinvestment Act of 2009 COBRA Subsidy
02/18/2009
Below are some preliminary details related to the COBRA subsidy provisions outlined in the American Recovery and Reinvestment Act of 2009 (ARRA). It is expected that within the next 30 days the Treasury Department, The Department of Labor and The Secretary of Health and Human Services will issue new regulations regarding these changes. Yozell Associates will notify our clients as more details become available.
I. Employee Eligibility - Individuals who have been involuntarily terminated between September 1, 2008 and December 31, 2009 with annual incomes less than $125,000 (single) or $250,000 (couples) are eligible for the full COBRA subsidy, along with their family.
II. Special Enrollment - Qualified individuals, who initially declined COBRA coverage between September 1, 2008 and March 1, 2009 must be notified and given an additional 60 days after they receive notice of the special election period to elect to receive the subsidy. The election period begins on the date of enactment of the ARRA.
The legislation permits employers to offer eligible beneficiaries the opportunity to select either the health plan they previously were enrolled in or a lower cost option than the one they were enrolled prior to the layoff if available.
III. COBRA Subsidy - Eligible workers will receive a 65% subsidy toward their health care coverage premium for up to 9 months. The Treasury Department will administer the subsidy, providing employers with a credit against payroll taxes for the cost of the subsidy (details to be determined). The subsidy would terminate upon offer of any new employer-sponsored health care coverage or Medicare eligibility.
IV. Notice Requirements - COBRA notices must include information on the availability of the subsidy. Model notices from the Department of Labor are due 30 days after enactment.
V. Effective Date - These provisions are effective for premiums the first calendar month following the date of enactment or March 1, 2009.
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