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ARTICLE · 03 MARCH 2009

Quick Action Required For COBRA Administration And Compliance

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Beginning March 1, 2009, individuals eligible for COBRA coverage as a result of involuntary termination on or after September 1, 2008, and before January 1, 2010, need to pay only 35% of their regular COBRA premiums.

United StatesEmployment and HR
Katten Muchin Rosenman LLP
Katten Muchin Rosenman LLP
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Executive Summary

Beginning March 1, 2009, individuals eligible for COBRA coverage as a result of involuntary termination on or after September 1, 2008, and before January 1, 2010, need to pay only 35% of their regular COBRA premiums. For self-insured plans, the employer generally has to pay the other 65% and then claim credit for this amount against future payroll tax payments. An eligible individual can take advantage of this 65% subsidiary for nine months. Group health plans are required to provide notice of this subsidy to eligible individuals by April 18, 2009.

COBRA Subsidy

President Obama signed the American Recovery and Reinvestment Act of 2009 (the "Act") into law on February 17, 2009. The Act adds a COBRA subsidy intended to help individuals and their families who have lost their jobs to maintain their health care coverage. As additional guidance, the IRS has posted a Q&A for employers on its website at: http://www.irs.gov/newsroom/article/0,,id=204708,0

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