December 22, 2009
Re: Extension of COBRA Continuation Requirement in the American Recovery and Reinvestment Act (ARRA)
Yesterday President Obama signed a measure to extend premium reductions for health benefits under COBRA. The extension adds another six (6) months to the benefit for a total of 15 months. In addition, it requires employers to notify current and future COBRA participants of the extended 15 month eligibility.
The benefit is for employees involuntarily terminated between September 1, 2008 and February 28, 2010. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to 15 months for those eligible for COBRA.
There are also special provisions for New Jersey employers with less than 20 employees. Local employers may also want to review this issue with their human resources or labor relation advisors.
For more information on this, visit the U.S. Department of Labor’s website at www.dol.gov/ebsa/COBRA.html. Employers, including local governments, will be able to fully recoup their new COBRA costs, by taking them as a credit against their quarterly IRS withholdings. You can access the IRS information on this, and download the updated Form 941, at their website at www.irs.gov. If your COBRA costs exceed your IRS withholdings, you will be entitled to a refund from the IRS.
For more information, contact Lori Buckelew at 609-695-3481 ext. 112 or by e-mail email@example.com.
Very truly yours,
William G. Dressel, Jr.