Additional Guidance and Information Posted Today
Today, the Department of Labor (“DOL”) posted additional guidance and information on its website to further assist employers, plan sponsors and third-party administrators in meeting their COBRA notice and new premium subsidy obligations under the American Recovery and Reinvestment Act (“ARRA”). In addition, the Internal Revenue Service (“IRS”) has issued Notice 2009-27 providing further guidance on the COBRA premium subsidy. Notice 2009-27 includes a lengthy discussion and interpretation of the COBRA premium subsidy rules, plus 58 Q&As on key areas of application, including what is an involuntary termination, who is an assistance eligible individual, how to calculate the premium reduction, types of coverage eligible for premium reduction, and when the subsidy begins and ends.
As you know, under ARRA, certain individual who are eligible for COBRA coverage because of their own or a family member's involuntary termination from employment that occurred from September 1, 2008 through December 31, 2009 and who elect COBRA, may be eligible to pay a reduced premium. These individuals, known under ARRA as “assistance eligible individuals” are required to pay only 35% of the COBRA premiums under their plans for up to 9 months and employers (or other responsible entity) may recover the remaining 65% of the premium by taking the subsidy amount as a credit on its quarterly employment tax return.
The additional information, which is available at http://www.dol.gov/COBRA, includes:
- Expanded Frequently Asked Questions for Employers on the COBRA Premium Reduction
- New Questions and Answers Regarding the Model Notices
- A Registration page for a Second Compliance Webcast on Monday, April 6, 2009
- The Announcement of Additional COBRA Compliance Workshops in Various Cities.
A copy of IRS Notice 2009-27 is also available on the DOL website.
We recommend that clients review this new information and consider attending the free webcast on Monday, April 6, 2009 at 3 p.m. EST. On the webcast, the DOL will be joined by the U.S. Department of the Treasury and the Internal Revenue Service to discuss the new COBRA provisions and the latest guidance, including information on the model notices and tax credit. This is a great opportunity to hear from the federal regulators directly and have the opportunity to ask questions.