Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions

Stimulus mandates temporary relief on COBRA premiums

November 15, 2010

Dealers with former employees and certain beneficiaries eligible for continuing health insurance coverage may need to issue a new COBRA notice indicating that they may be eligible for a 65 percent reduction in premiums.


The American Recovery and Reinvestment Act of 2009 (ARRA) provides temporary, taxpayer-funded premium relief for people otherwise eligible to elect to continue an employer’s health plan coverage under the Consolidated Budget Reconciliation Act of 1985, known as COBRA.


As of Feb. 17, the ARRA program applies to people who become eligible for COBRA between Sept. 1, 2008, and Dec. 31, 2009. Those who choose to continue coverage may receive a 65 percent plan continuation premium discount.


In other words, employees who normally would pay 100 percent of their COBRA plan premiums may have to pay only 35 percent, with employers or the health plan picking up the difference.


The Department of Labor will issue a new model notice form by March 19, and the NADA has scheduled a Webinar about this subject for that date.