Changes to COBRA Included in Stimulus Package

The American Recovery and Reinvestment Act (the “Act” or “Stimulus Package”) included important changes to the Consolidated Omnibus Reconciliation Act (“COBRA”). Generally speaking, COBRA allows workers who have lost employer-sponsored health insurance to retain coverage for a period of time. The Stimulus Package includes important provisions related to the cost of health insurance premiums.

Generally speaking, when an employer provides health insurance, the cost of the health insurance premium is covered in part by the employer and in part by the worker. Prior to the Act, when a worker lost his or her job and elected to receive health insurance through COBRA, the worker paid the full cost of the insurance coverage him- or herself. However, with the passage of the Act, in most cases if a worker was terminated between September 1, 2008 and December 31, 2009, the worker will be required to pay only 35 percent of the cost of the health insurance premium. The remaining 65 percent will be subsidized by the federal government.

Employers or their health plans must notify former workers of their right to pay reduced premiums for COBRA health insurance by April 18, 2009.

For more information about COBRA, please visit The U.S. Department of Labor website.

For more information, please call Abby Pendleton, Esq., Robert Iwrey, Esq., Adrienne Dresevic, Esq., Carey F. Kalmowitz, Esq. or Jessica L. Gustafson, Esq. at (248) 996-8510 or visit The HLP website.