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COBRA -
American Recovery & Reinvestment Act
Important Notice New COBRA Information
In an
effort to help you better understand the changes to COBRA under the
“The American Recovery and Reinvestment Act of 2009 (ARRA), New
Agency Partners offers the following summary and key dates.
In
addition, detailed information and links to websites are provided to
the left and we will continue to add pertinent information as it
becomes available
Summary
-
The COBRA changes affect both the
federal COBRA provisions and the Public Health Service Act
program that provides similar extension benefits for public
programs. In addition, the subsidy provisions apply to state
continuation coverage that is comparable to federal COBRA
- An individual
is eligible for the COBRA premium subsidy if he or she is:
involuntarily terminated from employment during the period
beginning September 1, 2008 through December 31, 2009 and is
eligible to elect COBRA during that time.
- ARRA provides
a subsidy of 65% of the COBRA continuation coverage premiums for
eligible individuals for a maximum of 9 months, so that an
eligible individual will only have to pay 35% of the COBRA
premium to obtain coverage.
- The subsidy
is offset by a tax credit against the employer’s wage
withholdings and FICA payroll taxes.
Key Dates
- Date of
enactment is February 17, 2009.
- The date the
subsidy is effective is for the first period of coverage on or
after February 17, 2009. (example – March 1, 2009 for calendar
plans)
- The
subsidized period is a maximum of 9 months.
- The subsidy
applies to eligible individuals who had a qualifying event due
to involuntary termination on or after September 1, 2008 through
December 31, 2009.
- Model notices
and guidance are expected from the Department of Labor by March
19, 2009.
-
Notices must be sent to
individuals within 60 days of enactment.
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