COBRA Continuation Coverage under the American Recovery and Reinvestment Act of 2009

Corporate Lawyers

Posted in on March 13, 2014

Did you know that the American Recovery and Reinvestment Act of 2009 provides a limited government subsidy for employees’ COBRA continuation coverage. The Recovery Act provides a 65% subsidy for COBRA continuation premiums for up to 9 months for workers who have been involuntarily terminated and for their families. This applies to group health plans that are subject to the Federal COBRA continuation coverage requirements or to similar requirements under Massachusetts and other state “Mini Cobra” laws. If your company has such a plan and receives a 35% payment from someone eligible for the subsidy, it must make the remaining 65% premium payment. However, the company is “paid back.” It can either offset its payroll tax deposits or claim the subsidy as an overpayment at the end of the payroll quarter.