From Barran Liebman eAlert June 11, 2010
Tag Archives: COBRA
WASHINGTON—The U.S. House of Representatives overwhelmingly approved legislation Wednesday that would extend the federal subsidy of COBRA health insurance premiums for employees who are involuntarily terminated.
The COBRA Subsidy is continually evolving. In a notice published March 31, 2009, the IRS addresses a number of significant issues resulting from the new COBRA Subsidy. Most important, the new notice clarifies the term “involuntary termination” and how the COBRA premium reduction is calculated. For example, when an employee accepts a severance package rather than face the prospect of an announced reduction in force or when an employee quits rather than accept a position with significantly reduced hours, the termination of employment will be considered “involuntary” for purposes of the COBRA subsidy. Click here to read the full notice: http://www.irs.gov/pub/irs-drop/n-09-27.pdf.
The American Recovery and Reinvestment Act of 2009, also known as the Stimulus Package, was signed into law February 17th, 2009. The Act contains significant changes for COBRA including an employer and employee subsidy of COBRA premiums for employees who were involuntarily terminated from September 1st, 2008 through December 31, 2009 and a special election period for qualified individuals who experienced an involuntary termination on or after September 1st, 2008 and were eligible for COBRA but did not elect coverage (and who are not eligible by another group health plan or Medicare).