Employment Benefits Alert: COBRA Subsidy Provisions of the American Recovery and Reinvestment Act of 2009


On February 17, President Barack Obama signed the American Recovery and Reinvestment Act of 2009 (“ARRA”) into law. This stimulus package provides significant health care continuation coverage relief for lower- and moderate-income employees who are involuntarily terminated between September 1, 2008 and December 31, 2009. In most cases, such employees may no longer purchase their health care coverage at the employer-subsidized rate, but must pay continuation coverage premiums equal to 102% of the full employer group rate, as mandated by the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Otherwise, they risk loss of their health care coverage.

Additional clarifying guidance and regulatory explanations regarding the COBRA subsidy provisions of ARRA are still forthcoming, as is a model notice from the Department of Labor that explains the availability of COBRA premium assistance to affected employees. The information contained in this summary may be modified as further guidance becomes available. In the meantime, the general highlights of ARRA’s COBRA provisions are as follows.

Please see full alert for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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