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COBRA Special Election Period Required

March 13th, 2009 Posted by Amelia

The ARRA or American Recovery and Reinvestment Act of 2009 includes a special provision for continued healthcare coverage for unemployed workers under COBRA.

The COBRA subsidy means that many terminated workers will pay just 35% of their usual COBRA subsidy. The employer will pay the balance of the premium and take a tax credit on the quarterly payroll taxes.

According to the latest U.S. Department of Labor COBRA Subsidy Fact Sheet, employers must conduct a special COBRA election period for qualified employees that lasts for 60 days. Notices about the special election period must be mailed to all eligible employees by April 17, 2009.

Individuals who were involuntarily terminated from September 1, 2008 through February 16, 2009 and did not elect to take COBRA coverage when it was offered, are eligible for the special election period. Workers who initially elected for the COBRA coverage but are no longer covered (perhaps because they have stopped paying the premiums) are also eligible during the special election period.

The special election period for all qualified employees began on February 17, 2009 and continues for 60 days after the insurance plan administrator provides COBRA notification to the eligible employees.

Employees who opted out of COBRA coverage at 100% of the premium, now have the opportunity to opt in to COBRA at 35% of the premium.

COBRA coverage elected in this special period begins with the first period of coverage that starts on or after February 17, 2009. The subsidy extends for a total of 9 months. Employees are still eligible for COBRA coverage for a total of 18 months, but at this point the employee must pay the full premium for the additional 9 months.

Any insurance administrator who has not provided notice of the special election period to eligible workers should do so immediately. In cases where the employer is not the plan administrator, the employer should verify that the COBRA subsidy notices have been sent.

Other COBRA resources for employers:

Revised Form 941 for Quarterly Payroll Taxes

U.S. Department of Labor Benefits Advisors at 1-866-444-3272

COBRA information and regulations

COBRA questions answered