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Key Dates

• Date of enactment is February 17, 2009.
• The date the subsidy is effective is for the first period of coverage on or after February 17, 2009.
• The subsidized period is a maximum of nine months.
• The subsidy applies to eligible individuals who had a qualifying event due to involuntary termination on or after September 1, 2008 through December 31, 2009.
• Model notices and guidance are expected from the Department of Labor by March 19, 2009.
• Notices must be sent to individuals within 60 days of enactment.

Summary

• The new legislation expands COBRA and includes a U.S. government subsidy to assist eligible individuals who recently lost their jobs.
• The subsidy is offset by a tax credit against the employer's wage withholdings and FICA payroll taxes.
• The legislation explains that eligible employees would include those who were involuntarily terminated and were eligible for COBRA coverage during the period from Sept. 1, 2008, through Dec. 31, 2009.
• This means that employers would have to contact certain terminated employees going back to September 1, 2008 to tell them that they have another opportunity to elect COBRA coverage, starting with the date of the legislation's enactment. If they elect coverage, they would have to pay only 35% of the premium.

For more information view a summary of the COBRA Premium Subsidy Law for employers by Ceridian »