The American Recovery and Reinvestment Act, better known as the “stimulus package,” was signed into law by President Obama on February 17, 2009. The Act significantly impacts employers subject to COBRA, which includes almost all employers with 20 or more employees. When the Act becomes effective on March 1, 2009, employers’ responsibilities under COBRA will change substantially. Some of the major changes include:
- For workers who were involuntarily terminated between September 1, 2008 and December 31, 2009, the government will subsidize 65% of their premiums under COBRA for up to nine months.
- Workers who were involuntarily terminated between September 1, 2008 and March 1, 2009, but who did not initially elect COBRA, will receive an additional 60 days to elect COBRA and receive the subsidy.
- Employers that administer COBRA benefits will receive a credit against payroll taxes for the cost of the subsidy.
- COBRA notices must include information on the availability of premium assistance. Model notices from the Department of Labor (DOL) will be available by April 1, 2009.
- Employees having a modified adjusted gross income exceeding $125,000 (single) or $250,000 (couples) are not eligible for COBRA premium assistance.
- The subsidy terminates upon offer of any new employee-sponsored health care coverage or Medicare eligibility, or nine months, whichever comes first.