COBRA Subsidy Extended Through February 28, 2010
As originally enacted as part of the 2009 stimulus package, the COBRA subsidy provided up to nine months of health insurance premium assistance for covered workers who were involuntarily terminated on or before December 31, 2009. Last week, President Obama signed a bill that extends the COBRA subsidy for involuntarily terminated employees in two ways: First, it extends the eligibility period to provide assistance to workers who were involuntarily terminated on or before February 28, 2010; second, it provides up to 15 months of insurance premium assistance.
Employers should, as soon as possible but in any case no later than February 21, 2010, provide notices to all former employees who may be affected by the extension informing them of their rights. Employers should also update the COBRA subsidy information they are currently providing to employees upon termination to ensure that it accurately reflects the eligibility period.
Want to know more? For more information on the COBRA subsidy in general, read Stoel Rives' COBRA Subsidy Alert from earlier this year (but ignore the out-of-date eligibility dates). You can also click here to read the IRS' COBRA subsidy information page, with answers to frequently asked questions.
IRS, DOL Publish New Info on COBRA Subsidy
Today the Department of Labor expanded its FAQs on the COBRA subsidies included in the American Recovery and Reinvestment Act of 2009 (ARRA). Click here to read the DOL's new COBRA FAQs.
Wondering what the tax implications of the subsidy are, or whether the person asking for the subisidy is truly eligible? Click here to read the IRS's Premium Assistance for COBRA Benefits. If that doesn't answer your tax questions, click here to visit the IRS's ARRA page.
As a reminder, employers can click here to download the new model COBRA notices.
Sick to death of COBRA and need to relieve the stress it's caused? Click here to visit Orisinal - a site full of calming, zen-like computer games.
And finally, click here to visit the World of Work's complete COBRA coverage.
Model COBRA Subsidy Notices Now Available
The Department of Labor has published four model notices to help employers, plans and individuals comply with the notice requirements of the COBRA subsidy provisions of the American Recovery and Reinvestment Act of 2009 (ARRA). Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA’s notice provisions. Click on the title of each to download:
- General Notice (Full version). Plans subject to the Federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event, AND who either have not yet been provided an election notice or who were provided an election notice on or after February 17, 2009 that did not include the additional information required by ARRA. This full version includes information on the premium reduction as well as information required in a COBRA election notice.
- General Notice (Abbreviated version). The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA, but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after September 1, 2008, have already elected COBRA coverage, and still have it.
- Alternative Notice. Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States, and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.
- Notice in Connection with Extended Election Periods. Plans subject to the Federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who (1) had a qualifying event at any time from September 1, 2008 through February 16, 2009; and (2) either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA. This notice includes information on ARRA’s additional election opportunity, as well as premium reduction information. This notice must be provided by April 18, 2009.
For more information about the COBRA subsidy, click here to read our coverage at the World of Work. Or, click here to go to the Department of Labor's COBRA Subsidy Website.
Revised IRS Form 941 Provides for COBRA Premium Assistance Credit
Employers: The Internal Revenue Service has issued a new Form 941 (Employer's Quarterly Federal Tax Return) that provides for any credits due because of the new COBRA Premium Assistance Credit. You can download the new form by clicking on the links below:
The IRS also has put up this web page to provide tax assistance to employers taking advantage of the COBRA credits. To read more on the COBRA Premium Assistance Credit, check out our coverage at the World of Work.
DOL Issues FAQs on COBRA Subsidy
The Department of Labor's Employee Benefits Security Administration has posted answers to 10 frequently asked questions regarding the COBRA subsidies included in the new stimulus package. Most relate to individual claims for the subsidy, but the information may be helpful to employers as well.
For more information about the subsidy, click here to read our coverage at the World of Work. Or, click here to go to the Department of Labor's COBRA Subsidy Website.
(Okay, this picture has nothing to do with the continuation of health care, and the FAQs don't say anything about snakes. We just like to keep things interesting at the World of Work.)
New COBRA Subsidy Forms and Information Available
The Department of Labor's Employee Benefits Security Administration has just released a salvo of new forms and information on the COBRA subsidy. Click on the titles below to download:
- COBRA Premium Reduction Fact Sheet
- Job Loss Poster (8½" x 11")
- Loss Poster (11" x 17")
- Flyer for Employers • Flyer for Employees
- COBRA Continuation Health Coverage FAQs for Employees
- COBRA Continuation Health Coverage FAQs for Employers
- IRS Information on COBRA Premium Reduction
- DOL Information Related to the American Recovery and Reinvestment Act of 2009
Keep watching the World of Work for more information on the COBRA subsidy!
Help On Stimulus Package's COBRA Assistance Available
We have more information for you on the provisions of the stimulus bill affecting the Consolidated Omnibus Budget Reconciliation Act (COBRA). First, the Employee Benefits Security Administration (part of the Department of Labor) has published this website with information on COBRA continuation coverage assistance. The Web site also includes a "Subscribe To This Page" link, allowing users to receive e-mail updates when new items are posted. Second, in case you didn't receive it, Stoel Rives sent out this client alert last week, with more detailed information on the COBRA assistance program.
Stimulus Package Includes COBRA Subsidies
Among the provisions of the new stimulus package signed by President Obama are subsides for unemployed workers continuing their health care benefits through the Consolidated Omnibus Budget Reconciliation Act (COBRA). The key points of the package are:
- Who is eligible? Employees who have been involuntarily terminated between September 1, 2008 and December 31, 2009 with annual incomes less than $125,000 (single) or $250,000 (couples) are eligible for the COBRA premium assistance. Qualified individuals, who initially decline COBRA coverage, would be given an additional 60 days after they receive notice of the special election period to elect to take advantage of the subsidy.
- How much is the subsidy? Eligible employees may receive a 65 percent subsidy toward their health care premium for up to nine (9) months. The Treasury Department will provide employers (or health plans, if they administer COBRA benefits) a credit against payroll taxes to cover the cost of the subsidy. The subsidy terminates upon any offer of new health care coverage through an employer or with Medicare eligibility.
- Are there new notice requirements? Of course! COBRA notices must include information on the availability of the premium assistance. Model notices from the Department of Labor are due 30 days after enactment (so by March 18, 2009). The Act requires employers to notify all plan participants of the new subsidies within 60 days of enactment (or by April 17, 2009). We'll post the model notice as soon as it is available.
- When does the subsidy take effect? March, 2009.
For more information on COBRA, check out this page from the Department of Labor.
