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It is highly likely that on or shortly after March 1, President Obama will extend the current COBRA premium subsidy through December 2010. In the most likely scenario, employees terminated between March 1, 2010 and December 31, 2010 would qualify for the COBRA subsidy for 12 months.

If passed, this extension will mean another round of COBRA notifications for overworked HR pros.

Currently, workers who lost their jobs (through no fault of their own) between September 1, 2008 and (more…)

On April 2, 2009 the U.S. Department of Labor issued additional regulations regarding the COBRA Premium Reduction under ARRA, the American Recovery and Reinvestment Act of 2009.

Under the ARRA, employees who were involuntarily terminated between September 1, 2008 and December 31, 2009 can keep their group health insurance and pay just 35% of the usual premium. The remaining 65% of the health insurance premium is paid by the federal government, through a credit on the employer’s quarterly payroll taxes.

Because of the new program, terminated workers who initially declined COBRA now have an opportunity to sign up for it, during the Special COBRA Election Opportunity. Each employer or COBRA administrator must inform eligible workers by April 17, 2009 of the opportunity to elect COBRA coverage at the subsidized rate. The Special COBRA Election Opportunity period began on February 17, 2009 and ends 60 days after the plan provides the required notice.

The COBRA Premium Reduction is in place for 9 months. During that time, employees pay just 35% of the total COBRA premium.

The COBRA Premium Reduction does not extend COBRA coverage for a longer period – in most cases, the employee is eligible only for coverage for 18 months.

A number of states have extended COBRA-style coverage to employers with fewer than 20 workers on group health insurance. While the COBRA subsidy does apply to these smaller “state plan” employers, the Special Election Opportunity does not. Employees who are terminated today (more…)

As daily readers of this blog know, the ARRA or American Recovery and Reinvestment Act of 2009 provides for extended COBRA coverage at reduced cost for many unemployed workers.

COBRA, or the Consolidated Omnibus Budget Reconciliation Act of 1985, permits employees to extend their group health insurance coverage for up to 18 months when they lose coverage due to unemployment, a reduction in hours, divorce, or similar circumstances. COBRA also applies to dependents who lose group health insurance coverage for similar reasons, or due to the employee’s death. Employees who are fired for gross misconduct are not eligible for COBRA coverage.

The big news is that ARRA allows employees to pay just 35% of their usual COBRA premium. It also gives eligible employees a special period to sign up for COBRA coverage. This COBRA premium reduction covers any worker who has lost their job between September 1, 2008 and December 31, 2009.

Under the COBRA Premium Reduction, the employee can pay just 35% of the usual COBRA premium. The employer pays the remaining 65% of the premium, and then takes a tax credit on the quarterly federal payroll taxes. In this way, the federal government is picking up the tab on 65% of the employees group health insurance premium, and there is no gap in healthcare coverage.  

The COBRA Premium Reduction under the 2009 stimulus package applies for a maximum of 9 months.

Employees who did not opt to take advantage of COBRA coverage have a second chance (more…)