COBRA Healthcare Plan Rules Temporarily Modified
Effective Date March 1, 2009 - Revised December 19, 2009
To see the full text of the COBRA modifications included in the Act, click here for a PDF.
Overview of the Modifications:
The information below is a very brief summary of how the modifications are currently being interpreted by industry experts. This information is for informational purposes only and is not intended as legal advice, nor is it intended to advise you of your legal obligations under the American Recovery and Reinvestment Act of 2009 (ARRA).
The ARRA makes substantial, but temporary, changes to the rules governing the continuation of health coverage under COBRA. Most notable is that employers are required to facilitate a federal subsidy of COBRA premiums beginning March 1, 2009. The subsidy will cover 65% of the monthly premium, for a period of up to 15 months. Employers will subsidize the remaining 65%, but have the right to recover the subsidy amount from the federal government.
- Individuals who qualify are those whose employment is/was involuntarily terminated between September 1, 2008, and February 28, 2010, and who are eligible for continuation coverage under COBRA because of the termination. These individuals will be able to continue health coverage at only 35 percent of the ordinary COBRA premium for up to 15 months.
- The new subsidy rules apply to plans that are subject to COBRA, certain federal government plans, and plans that are exempt from COBRA but subject to comparable requirements for health coverage continuation under state law. Health flexible spending arrangements provided through a cafeteria plan are exempt from the requirements.
- After receipt of the subsidized payment, the employer is directed to reduce its payroll tax deposits by an amount equal to the remaining 65% of the COBRA premium.
Primepoint will Help You Comply to the Payroll Related Modifications:
-
Primepoint has created a form that our customers
may use to communicate to us what is due to their company with respect to these
COBRA subsidies. After you have used
the form to report the appropriate information to Primepoint, it will enable us
to report the information on your company’s next quarterly IRS form 941. This
will enable the IRS to send your company the appropriate refund(s): Click Here to Access a PDF of the Form
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