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Consolidated Omnibus Budget Reconciliation Act (COBRA)

*IMMEDIATE COMPLIANCE REQUIRED*

The American Recovery and Reinvestment Act of 2009 (ARRA) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA.

ARRA treats assistance eligible individuals who pay 35 percent of their COBRA premium as having paid the full amount. The premium reduction (65 percent of the full premium) is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes. If the credit amount is greater than the taxes due, the Secretary of the Treasury will directly reimburse the employer, insurer or plan for the excess.

The premium reduction begins March 1, 2009.  It applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months.
Within 60 days after the Act became law on February 17, employers must provide eligible individuals with additional COBRA election materials and subsidy information. 

The Department of Labor does not yet have a model notice or sample forms available, but has indicated more information will be available on its website in late March.  See the Department of Labor’s website and fact sheets for more details:

http://www.dol.gov/ebsa/newsroom/fsCOBRApremiumreduction.html

 

 

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