labor lawAdivision of labor law center

The 2009 COBRA Premium Reduction under the ARRA affects millions of laid-off workers, and employers are being deluged with questions on it. Here are some answers to the most frequent questions.

 

COBRA, the Consolidated Omnibus Budget Reconciliation Act, permits employees to extend their group health insurance after being laid off or terminated. The COBRA Subsidy reduces premiums for workers who are out of work, though no fault of their own. COBRA regulations are issued through the U.S. Department of Labor.

 

How much is the COBRA premium reduction?

The COBRA premium reduction is 65%, meaning that the federal government picks up 65% of the tab, while the employee pays just 35% of the usual COBRA premium.

 

When should employees be notified of the COBRA Premium Reduction? Employees laid off between September 1, 2008 and February 17, 2009 must be informed in writing of the premium reduction by April 17, 2009.  Employees then have 60 days after receiving notice to opt to sign up for COBRA under the reduced premium.

 

Employees who are terminated between February 17, 2009 and December 31, 2009 must be notified of COBRA within 60 days, just as usual. However, that notification will include the reduced premium.

 

Any laid-off worker who has not received notification at this point, should contact both the previous employer and the insurance administrator.

 

Can employees who initially declined COBRA sign up now, with the reduced premium?

Yes, an employee who was terminated between September 1, 2008 and February 17, 2009 can sign up for COBRA with reduced premiums during the special election period. This is true, even if the employee initially declined COBRA coverage when terminated.

 

How long does the COBRA Premium Reduction last?

The COBRA subsidy lasts for a maximum of 9 months. While it is possible that this could be extended, there has been no discussion of doing so at this point.

 

How long does COBRA last?

Most laid-off employees qualify for COBRA for up to 18 months. However, only 9 of those months would be at the reduced premium.

 

Where can I get more information?
Both employers and employees can get more information on the COBRA Subsidy by calling a U.S. Department of Labor Benefits Advisor at 1.866.444.3272

 

 

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1. Posted by: Rob

   An employer is requiring laid off employees to Opt-In to the ARRA Cobra subsidy despite having opted into the COBRA coverage during the time period specified in the ARRA bill.

   http://www.adpcobrafsa.com/cobra/participant-information

   They posted the new “Opt-In” form on April 8th on their website, changing the substance of the information they had on the page which stated that the subsidy would be automatically applied and credited or refunded back to people who paid their premiums in March. I was one of the people who paid his premium in March and am just finding out now about this ridiculous opt-in requirement they now have retroactively added onto the original sign-up for Cobra benefit subsidies under the ARRA

2. Posted by: Amelia

   Hi Rob! Actually, this looks completely legitimate to us. An employee might opt out of the COBRA subsidy for a number of reasons. Her family income might be too high for her to qualify, she might be eligible for other insurance, or she might just object to the bail-out in general. The employer cannot know these details, so it is not appropriate for the employer to *automatically* implement the COBRA premium reduction (subsidy.) The employee does need to sign off on it. Most Americans are more than willing to fill out a form, to have the government pay 65% of their health insurance for 9 months. HTH, and thanks for reading the blogs!~ Amelia

3. Posted by: Rob

   Ridiculous.

4. Posted by: Amelia

   Hi again, Rob! Is it the COBRA subsidy in general that you object to, or just signing up for it?~ Amelia