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Dear Client,
THIS IS THE BEST INFORMATION WE HAVE.
The House and Senate have both passed the "American Recovery and Reinvestment Act" (ARRA). The final version of ARRA which has been signed by the President includes provisions regarding COBRA.
ARRA provides for a 65% COBRA premium subsidy for eligible employees for up to nine months. The premium subsidy only applies to involuntary terminations that occur on or after September 1, 2008 and before January 1, 2010.
Involuntarily terminated employees that never enrolled in COBRA, whose qualifying event was on or after September 1, 2008 will be offered the option to enroll in COBRA effective March 1, 2009. Accounts of current COBRA participants that qualify will be updated to reflect the subsidy effective March 1, 2009. The DOL will be providing a model notice to send out within 30 days. Once the model notice is available we will notify the eligible participants. The Act allows 60 days for these notices to be sent.
ARRA allows employers to receive a credit for the 65% premium subsidy against payroll taxes. The credit can only take place after the COBRA participant makes a payment for that month. If this credit creates an overpayment of payroll taxes, employers can request a direct payment of this amount in the same manner as if it were an overpayment of such taxes.
Thank you.
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