labor lawAdivision of labor law center

Good news for HR pros who complain that the COBRA subsidy has placed an unfair burden on employers: the federal government, not employers, will be responsible for enforcing some of the subsidy provisions.

Under the ARRA or American Recovery and Reinvestment Act of 2009, employees involuntarily terminated between September 1, 2008 and December 31, 2009 qualify for a 65% subsidy on extended group health insurance.

However, the COBRA subsidy has income limits. Reduced subsidies apply to individuals with an adjusted gross income (AGI) of $125,000 or more and couples (filing jointly) with AGI  of  $250,000 or more. Individuals with adjusted gross incomes over $145,000 and couples with income over $290,000 for the year they receive COBRA (more…)

The COBRA subsidy is one of the most notable features of the ARRA or American Recovery and Reinvestment Act signed into law on February 17, 2009. 

The employee will pay just 35% of the usual COBRA premium. Under this plan, employees who lose healthcare coverage due to terminate will qualify for a 65% government subsidy on continued group insurance coverage under COBRA.

A new U.S. Department of Labor COBRA subsidy fact sheet outlines this program.

Under this program, the employer still pays the entire healthcare premium to the insurance company. The employer can then deduct 65% of the total premium from his or her payroll taxes.

Suppose a former employee of the XYZ Corp. normally pays $900 for COBRA coverage. Under the ARRA COBRA subsidy, the employee pays 35% of that amount, (more…)