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The American Recovery and Reinvesment Act (ARRA) 2009

Check out what TASC's CEO is saying about these changes!

On Tuesday, February 17, 2009, President Obama signed the American Recovery and Reinvestment Act into law. Included in the Act is a provision that may affect any companies which are required to offer COBRA to former employees: the Health Insurance Assistance for the Unemployed provision. Under this provision we know the following: 

• A 65 percent subsidy toward the purchase of health insurance will be available to individuals who have been involuntarily terminated from their employment between September 1, 2008 and December 31, 2009
• The subsidy will be good for a nine-month period. 
• The Treasury Department will administer the subsidy, providing employers with a credit against their payroll taxes to cover the cost of the subsidy.
• While there is no “look-back provision” for current COBRA Participants, Assistance Eligible Individuals who were involuntarily terminated and initially declined COBRA coverage or had elected COBRA but have since stopped paying premiums will be allowed to elect coverage with the subsidy during a extended election period.  They will only be able to elect back to the first period of coverage after the stimulus package was signed.  This date for all Assistance Eligible Individuals is March 1, 2009.
• Assistance Eligible Individuals who earn more than $125,000 (single) or $250,000 (joint return) will be required to claim the subsidy as taxable income in the year that they would receive the subsidy.  These individuals will have the option to waive the subsidy if they do not wish to claim them on their income taxes.
• Coverage is only available for the following plans: medical, dental, vision, Health Reimbursement Arrangement (HRA) and prescription only plans.  Flexible Spending Accounts are not eligible.
  

Check out this high-level summary of COBRA changes under the ARRA.

So what does this mean for companies who are required by law to provide COBRA coverage to former employees?  In means more complex rules, more contact with former employees and more risk of being out of compliance with this changing and evolving provision.

Now is a great time to consider shifting the burden of COBRA administration and compliance to COBRAToday.  Sign up with COBRAToday and it becomes our responsibility to keep you up-to-date on all of the latest developments.  COBRAToday will work tirelessly to ensure your complete compliance with this provision and help you contact any former employees who may be affected.

To learn more about COBRAToday, contact our sales department at 1-888-595-2261, ext. 17730 or email sales@tasconline.com.