COBRA: What do employers need to know?

What’s Changed?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) has been modified by The American Recovery and Reinvestment Act of 2009 (ARRA). Those who qualify will get the opportunity to pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to a coverage provider through a tax credit. The changes apply to health coverage that begins on February 17, 2009 and will continue for up to nine months for those eligible for COBRA during the period of September 1, 2008 and ending December 31, 2009.

What is The Purpose of COBRA?

The purpose of COBRA is to uphold the law that group health plans must provide employees and their families with the opportunity to continue their group health coverage. Under certain conditions, this applies when coverage would otherwise be lost due to termination of employment, a divorce or a death.

Who Qualifies for the
Subsidy?

In order to qualify for the subsidy, an individual must meet all of the following requirements:

· Individual must be eligible for COBRA continuation coverage at any time during the period beginning September 1, 2008 and ending December 31, 2009.
· COBRA must be elected when first offered or during the additional election period.
· Individual must have been involuntarily terminated during the period beginning September 1, 2008 and ending December 31, 2009.