Federal agencies begin releasing information on new COBRA premium subsidy program

The Department of Labor (DOL) and the IRS have started releasing information on the new COBRA premium subsidy program aimed at helping people pay for continued health coverage after an involuntary job loss between Sept. 1, 2008, and Dec. 31, 2009. New DOL materials address broad aspects of the program, while IRS questions and answers focus on how an employer can claim the premium subsidy.

DOL materials. Although the DOL materials don’t answer many important questions, they include information useful to employees as well as employers:

• A fact sheet gives a brief overview of COBRA and describes the COBRA subsidy program, including information on who is an assistance-eligible individual (AEI) and what coverage periods qualify for the subsidy, the second chance for some people to elect COBRA, and related notice requirements. Employers may want to share this fact sheet with individuals seeking information about the program before subsidy-related notices are sent.

• Flyers for employers and employees describe how to contact the DOL for more information on the program.

March 4 web briefing
on COBRA changes

Employers face tight deadlines to comply with new COBRA special enrollment rights, notices and temporary premium subsidies enacted with the stimulus law. To learn more about these changes, join this free web briefing.

Date: March 4, 2009

Time: 12:00 noon - 1:00 PM ET

Where: Your Internet-connected computer for the visual and telephone for the audio

Cost: Free

Speakers: Linda Havlin
Kathleen Murray
Kelly Traw
George Wagoner

Questions? webbriefings@mercer.com

Register Now!

• A job loss poster, available in letter-size and legal-size formats, highlights health benefit options for people losing their jobs.

• Frequently asked questions (FAQs) explain COBRA basics to employees and employers. The employee’s version includes a brief description of the subsidy program and may be useful to share with individuals.

Employers may find the fact sheet and FAQs handy resources to give individuals seeking information about the premium subsidy while awaiting more information from regulators. By March 19, the DOL is expected to release model notices to help employers meet the requirement to sd notices about the new program. The models should provide critical details about required notice content, including what forms a person must use to establish AEI status and what procedures an individual must follow to notify plans when losing AEI status.

IRS materials. The IRS has released a set of 20 questions and answers geared primarily at describing how employers can claim the subsidy. Employers can receive the subsidy by offsetting payroll tax deposits or by claiming a credit when filing their quarterly employment tax returns on IRS Form 941. The IRS has clarified that employers claiming the subsidy do not need to submit but must maintain supporting documentation, including these materials:

• Dates, months and other information on receipt of an individual’s premium payment

• Proof of an individual’s premium amount and payment

• Attestation of an individual’s involuntary termination, including the date

• Proof of an AEI’s eligibility for and election of COBRA continuation coverage during the relevant period

• Social Security number, subsidy amount and whether the subsidy for each covered employee was for one person or more people