Cobra Health Insurance Continuation Premium Subsidy

Under the American Recovery and Reinvestment Act of 2009, if an employee was involuntarily terminated, and otherwise eligible for COBRA benefits, during the period of 9/1/2008 - 12/31/2009, that person is eligible for a reduction in the cost of their COBRA health premiums. The former employee is required to only pay 35% of the cost and the employer pays the balance once it has received the employee’s share. The employer will then receive a tax credit for the payment on IRS Form 941 when filing its Employer's Quarterly Federal Tax return.

The premium payment assistance only lasts for 9 months and is retroactive to 2/17/2009. This subsidy will have to be repaid to the government by the former employee proportionately if the individual's modified adjusted gross income exceeds $125,000 or $250,000 for joint filers and repaid in full if the modified adjusted gross income that exceeds $145,000 or $290,000 for joint filers.

The Plan Administrator must send out new notices to those former employees that may have qualified but chose not to elect COBRA during that time period. Future notices must include information about the payment assistance until 12/31/2009. For more information, contact Curtis & Curtis, P.C.

This publication is for general information only and is not intended as formal legal advice. If you have any questions or need assistance, please contact Curtis & Curtis, P.C.

Curtis & Curtis, P.C. is a full service law firm located in Jackson, Michigan providing superior legal services and advice to individuals, families and businesses throughout mid-Michigan since 1901.