COBRA Insurance Rights Extended

The March 10, 2009 Issue of HR-News has detailed information about the federal government's expansion of COBRA rights under the Economic Stimulus Bill. Specifically, it discusses how the American Recovery and Reinvestment Act of 2009 ("ARRA") entitles employees terminated between September 1, 2008 and December 31, 2009 to continue health care coverage through COBRA by paying only 35 percent of their premiums for up to nine months.

For eligible employees, the remaining 65% of their premiums are paid by employers, who may deduct the cost from federal payroll taxes. Employers need to immediately comply with the law by providing notice to eligible individuals, collecting only 35% of the premiums from the employees, paying the remaining 65%, and filing quarterly tax returns claiming a credit for the 65% subsidized amount.

An employee (or certain ex-employees) and their covered dependents are eligible if: (1) they are involuntarily terminated (2) at any time between September 1, 2008 and December 31, 2009; (3) they elect COBRA coverage; (4) they do not earn more than $145,000 (or $290,000 for joint filers); and (5) is otherwise eligible for COBRA.

Another major change under the ARRA is the definition of a qualifying event. Under COBRA there are a number of these events but, under ARRA, there is only one: involuntary termination. Employees who voluntarily quit their jobs do not qualify for the reduced COBRA premiums. For involuntary terminations, the only exception is when the termination is for gross misconduct.

For more information, I would recommend the March issue of HR-News at http://www.hr-onesource.com/articles/mar09a-1_cobra.htm.