President Obama signed into law a financial stimulus package titled the American Recovery and Reinvestment Act of 2009 (ARRA). As a result, there have been significant changes to employer responsibilities related to COBRA continuation. As of February 17, 2009, ARRA enables certain eligible former employees to receive a temporary expansion of COBRA continuation coverage so they can maintain the health insurance they had during their employment.

In general, those who qualify for COBRA because of an involuntary termination of employment are entitled to a 65 percent federal government subsidy of COBRA continuation coverage premiums for a maximum of nine months. An employer with 20 or more employees is required to pay the 65 percent portion upfront and then obtain a tax credit for this amount by filing a claim of reimbursement with the federal government. An employer with 19 or fewer employees may or may not be required to offer COBRA.

The premium reduction for COBRA continuation coverage is retroactive and available to employees who lost their jobs as early as September 1, 2008. It also extends COBRA continuation coverage periods for certain individuals who receive Trade Adjustment Assistance benefits or pension benefits from the Pension Benefit Guaranty Corp. If these changes in COBRA are applicable, the employer needs to establish an administrative plan in order to provide the subsidy, provide notices required by ARRA to COBRA-qualified employees who are eligible for the subsidy, and implement the extended COBRA coverage periods.

ALTRES clients can rest assured that this new administration burden is being handled, at no additional cost, by simplicityHR.

For more information, about COBRA , visit http://www.dol.gov/dol/topic/health-plans/cobra.htm. For more information about the COBRA subsidy, visit http://www.dol.gov/ebsa/cobra.html.