Recovery Act

COBRA Implications of the American Recovery & Reinvestment Act

The American Recovery and Reinvestment Act (the Act) was signed into law by President Obama on February 17, 2009. The Act has wide-reaching ramifications, and we want to make sure you’re aware of the latest developments affecting health insurance.

The Act includes a subsidy for COBRA premiums for a period up to nine months for certain employees that were involuntarily relieved from their job from September 1, 2008, through December 31, 2009.

The COBRA subsidy covers 65 percent of the applicable COBRA premium, initially covered by the employer or the insurer and recouped through payroll tax credits. The remaining 35 percent will be the responsibility of the qualified beneficiary.

The COBRA subsidy becomes effective March 1, 2009. It imposes new COBRA administration and notice requirements on plan sponsors, in addition to those involved with the reimbursement process.

Download this PDF developed by one of our partners for more detailed information. The PDF is intended to provide initial guidance to plan sponsors. It is for informational purposes only and is not intended to interpret laws or regulations or to address specific client situations. The document will be revised as additional information becomes available from insurance carriers and government entities.

There are still many questions surrounding the Act and just how many of the elements will work. For those using Stephenson Welsh Insurance Services, we will continue to stay on top of all the latest developments associated with insurance coverages. We will keep you informed about any changes that might affect you and proactively bring to you any opportunities we see emerging.

The next update will likely come sometime after the U.S. Department of Labor report on this topic on March 19.

If you have any questions or need immediate attention, please call us toll-free (1-866-514-0144) or send us an e-mail.

To the best of our knowledge, based on available resources, the attached piece has been prepared with the intention of providing initial guidance to plan sponsors via the broker. It is for informational purposes only and is not intended to interpret laws or regulations or to address specific client situations. The information contained within may also change or be added to with new issuances by government agencies and/or insurance carriers. By redistributing this piece, Stephenson Welsh Insurance Services is released from all liability.

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