Important Health Coverage Provisions In U.S. Economic Stimulus Package Require Immediate Action

On February 17, 2009 U.S. President Obama signed into law the American Recovery and Reinvestment Act, also known as the "Stimulus Package." This Act includes some important provisions relating to health plan continuation coverage which, effective March 1, 2009, applies to all employers subject to COBRA, even those that do not request or receive financial assistance from the U.S. federal government under the "Troubled Assets Relief Program."

Employees who are involuntarily terminated from employment between September 1, 2008 and December 31, 2009 are entitled to a 65% subsidy for their COBRA premiums, paid for initially by the employer, but reimbursed by the U.S. federal government in the form of a payroll tax credit. The purpose of these provisions is to assist unemployed individuals in maintaining some form of health insurance coverage. For employers with group health plans, these new assistance provisions impose additional compliance burdens and include penalties