labor lawAdivision of labor law center

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…)

Many employers have questions about the COBRA subsidies offered under the Obama administration’s stimulus plan, which was signed into law on February 17, 2009.

The  ARRA, or American Recovery and Reinvestment Act of 2009, included a provision to subsidize extended health insurance coverage under COBRA, for some eligible employees.

The plan applies only to an “assistance eligible individual” or AEI who is laid off through no fault of his or her own, or is a dependent of a laid-off employee.

The subsidy applies beginning March 1, 2009 for employers who use calendar months for healthcare coverage.

Under the plan, the employee pays just 35% of his or her COBRA health care premium. The employer pays the other 65% of the COBRA premium. Employers can then take a tax credit (more…)

The new stimulus package has employers scrambling to conform to the COBRA expansion and take advantage of the COBRA subsidy.

Under the American Recovery and Reinvestment Act of 2009 or ARRA, also known as President Obama’s stimulus package, health care premiums for laid off employees are partially subsidized.

The bill, signed into law by President Barack Obama on February 17, 2009, provides a government subsidy of COBRA continuation coverage for a maximum of 9 months for certain laid-off workers and their eligible dependents. The measure does not cover employees who voluntarily quit.

Under the ARRA, plan administrators need to inform eligible employees and their beneficiaries of the program, implement extended COBRA coverage periods, and implement administrative procedures to take advantage of the subsidy.

In one of the major changes, the ARRA will subsidize 65% of the COBRA premium charged (more…)