Stimulus Plan Requires Immediate COBRA Action
by:Employee Benefits Practice
The American Recovery and Reinvestment Act of 2009 (the stimulus plan or the stimulus bill) that President Obama signed into law today contains, among other employee benefit changes, a series of new provisions temporarily modifying Consolidated Omnibus Budget Reconciliation Act (COBRA) group healthcare plan continuation rules. These provisions represent the most wide-ranging changes to COBRA since its inception and will require immediate action by employers and COBRA administrators.
The objective of these provisions is to provide a government subsidy which for nine months will cover 65% of the cost of COBRA coverage for assistance-eligible individuals whose employment is involuntarily terminated on and after September 1, 2008 and before January 1, 2010. This subsidy is generally tax-free to the assistance-eligible individual.
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