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COBRA Premium Reduction

COBRA Premium Reduction
Source - U. S. Department of Labor, Employee Benefits Security Administration Fact Sheet

The American Recovery and Reinvestment Act of 2009 (ARRA), as amended, provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA.

The premium assistance is also available for continuation coverage under certain State laws. ?Assistance Eligible Individuals? pay only 35 percent of their COBRA premiums; the remaining 65 percent is reimbursed to the coverage provider through a tax credit.

The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.

Generally, the maximum period of continuation coverage is measured from the date of the original qualifying event (for Federal COBRA, this is generally 18 months).

However, ARRA, as amended, provides that the 15 month premium reduction period begins on the first day of the first period of coverage for which an individual is ?assistance eligible.? This is of particular importance to individuals who experience an involuntary termination following a reduction of hours. Only individuals who have additional periods of COBRA (or state continuation) coverage remaining after they become assistance eligible are entitled to the premium reduction.

Those who are eligible for other group health coverage (such as a spouse's plan or new employer?s plan) or Medicare are not eligible for the premium reduction.

There is no premium reduction for periods of coverage that began prior to February 17, 2009.

The full text of the Fact Sheet is posted on the Internet at:
http://www.dol.gov/ebsa/pdf/fsCOBRApremiumreduction.pdf

Full post as published by New York Public Personnel Law on April 23, 2010 (boomark / email).