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Prepared by Mike Ewing, J.D.
Director of Research
United Actuarial Services, Inc.
(317) 580-8659
Fax (317) 580-8651
email: mewing@unitedactuarial.com
© United Actuarial Services, Inc. 2009
2009-15
February 25, 2009
Stimulus Bill Contains Subsidy for COBRA Premiums for
Individuals Who Are Involuntarily Terminated Between
September 1, 2008 and December 31, 2009
On February 17, 2009, the President signed into law H.R. 1, the American
Recovery and Reinvestment Act of 2009 (ARRA). The new law provides subsidies to
COBRA
premiums for certain individuals as set forth in ARRA at Division B
–
Tax,
Unemployment, Health, State Fiscal Relief, And Other Provisions,
–
Premium Assistance For COBRA Benefits, Section 3001 (hereafter Section 3001).
Links to the new law, the conference committee report, “To Do” information and
other resources are found at the end of this Client Bulletin. Let’s look at the basics
before going into a detailed analysis of the law.
SUMMARY
Individuals who lose their group health plan (GHP) coverage due to an involuntary
termination between September 1, 2008 and December 31, 2009 will be eligible to
receive federal government assistance that will pay 65% of the individual’s COBRA
premium that would otherwise be payable except for the subsidy. The subsidy is
prospective only (no retroactive reimbursements for COBRA premiums paid before
March 1, 2009). The subsidy lasts for a maximum of nine months beginning on or
after March 1, 2009, but may terminate early under certain conditions, such as the
person becoming covered under another GHP. Individuals must report to the Fund
Office if they are no longer eligible for the subsidy.
The subsidy will be paid to multiemployer plans directly, unlike single-employer
health plans that will receive the premium subsidy through payroll tax offsets and
direct reimbursement from the federal government for any shortfall. However, the
exact mechanism for reimbursing multiemployer plans has not yet been
determined.
The COBRA premium subsidy law has special notice requirements
and special
election periods. All individuals who were, or will be eligible to elect COBRA due to
an involuntary termination between September 1, 2008 and December 31, 2009
CLIENT BULLETIN