Joseph M. Kempter, J.D., LLM, CPA presented on COBRA compliance mandates of the American Recovery and Reinvestment Act of 2009 (ARRA) to the Estate and Financial Planning Council of Southern New Jersey on May 1, 2009 in Mt. Laurel, New Jersey.
The ARRA was enacted on February 17, 2009. It contains important new compliance mandates for COBRA health insurance administrators. If you are the plan administrator for your company’s COBRA program, you are required to provide notice within 60 days to assistance eligible individuals. These are certain former and exiting employees that may be eligible for reduced COBRA premiums or an additional COBRA election period.
The COBRA-related provisions of ARRA allow certain assistance eligible individuals to pay only 35% of their regular COBRA premiums for a period of up to nine months. A federal government subsidy will apply to the remaining 65% of the premium costs in the form of a credit against certain employment taxes. In general, assistance eligible individuals are former and exiting employees who are involuntarily terminated from their jobs between September 1, 2008 and December 31, 2009.
ARRA also provides certain individuals with an additional COBRA election period. This extension is generally intended for former employees who were involuntarily laid off between September 1, 2008 and February 16, 2009 who may qualify as assistance eligible individuals. These individuals may now have the opportunity to elect or resume COBRA coverage at the reduced premium costs for up to nine months. The new 60-day election period begins upon receipt of the COBRA-Stimulus compliance notice from the plan administrator.