Employers’ obligations under COBRA have been significantly increased by the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA is commonly known as the economic stimulus legislation recently passed by Congress and signed by President Obama.
In a nutshell, ARRA entitles employees terminated between September 1, 2008 and December 31, 2009 to continue health care coverage through COBRA by paying only 35 percent of their premiums for up to nine months. The remaining 65% is paid by employers, who may deduct the cost from federal payroll taxes. Employers must immediately comply with the law by providing notice to eligible individuals, collecting 35% of the premiums from the employees, paying 65%, and filing quarterly tax returns claiming a credit for the 65% subsidized amount.
ARRA mandates that plans notify certain current and former participants and beneficiaries about the premium reduction. Employers should send notices to employees who are involuntarily terminated between September 1, 2008 and December 31, 2009.
The Department created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA’s notice provisions. The forms were posted on the DOL website on March 19, 2009.
The model forms can be found by following this link.
For more information about the new COBRA / ARRA entitlements, follow this link for an article posted on my law firm’s website.
To join a complimentary webinar scheduled for March 23, 2009, follow this link: https://www2.gotomeeting.com/register/219649398
Christopher W. Olmsted, Esq.
Barker Olmsted & Barnier, APLC