The American Recovery and Reinvestment Act of 2009
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 a number of months 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
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