Labor & Employment Law

Economic stimulus bill includes COBRA obligations for employers

The United States Senate and House have come to an agreement on the terms of the economic stimulus package, known as the American Recovery and Reinvestment Act of 2009 (the ?Act?).

One important provision relates to continuation of group health coverage under COBRA.

While various versions of the Act?s COBRA provisions have been discussed and the final version of the Act has not been disclosed, there are two important issues that employers must be aware of.

First, the Act will provide a COBRA premium subsidy for certain individuals who were involuntarily terminated during a certain period of time. At this point, it is not clear how, as an administrative matter, the subsidy will be provided. Employers will be responsible for notifying individuals who are eligible for the COBRA subsidy.

Second, the COBRA provisions may impact the terms of a reduction in force (?RIF?) if the employer will provide payments for COBRA premiums. Employers will need to analyze how the COBRA subsidy affects the way in which a RIF is to be structured when the employer pays for COBRA premiums.

The attorneys in the Jackson Lewis Employee Benefits Counseling and Litigation and Workplace Privacy Practice Group will provide more information after the final bill provisions are made public.

Full post as published by New York Public Personnel Law on February 19, 2009 (boomark / email).