Obama's Stimulus Package Offers COBRA Premium Reduction to Involuntarily Terminated Employees
The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) provides for a temporary extension of employer-provided group health coverage, which is commonly referred to as COBRA continuation coverage. The American Recovery and Reinvestment Act (“Act”), which President Obama signed on February 17, 2009, includes several changes to COBRA continuation coverage that employers quickly need to address. The most notable impact is a significant reduction in the COBRA premiums paid by certain employees whose employment is involuntarily terminated. Under the Act, eligible individuals are required to pay only 35% of his or her COBRA premium. The remaining 65% of the COBRA premium will be reimbursed to the employer through a payroll tax credit.
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