Wednesday, March 24, 2010

DOL COBRA Premium Reduction Fact Sheet

Source: Department of Labor

COBRA Premium Reduction

U.S. Department of Labor
Employee Benefits Security Administration
March 16, 2010

The American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Department of Defense Appropriations Act (2010 DOD Act) on December 19, 2009 and the Temporary Extension Act of 2010 (TEA) on March 2, 2010, provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. 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.

To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must generally occur during the period that began September 1, 2008 and ends on March 31, 2010. However, TEA also provides that an involuntary termination of employment is a qualifying event for purposes of ARRA if the involuntary termination:

  • occurs on or after March 2, 2010 and no later than March 31, 2010; and

  • follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through March 31, 2010.

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