COBRA: Questions and Answers for Employers
Under the American Recovery and Reinvestment Act of 2009, certain individuals who are eligible for COBRA continuation health coverage, or similar coverage under state law, may receive a subsidy for 65 percent of the premium. These individuals are required to pay only 35 percent of the premium. The employer may recover the subsidy provided to assistance-eligible individuals by taking the subsidy amount as a credit on its quarterly employment tax return. The employer may provide the subsidy — and take the credit on its employment tax return — only after it has received the 35 percent premium payment from the individual.
The Defense Appropriations Act, 2010 (2010 DOD Act), enacted Dec. 19, 2009, extended the period in which an individual can become eligible for the COBRA subsidy and the period for which an individual can receive the subsidy. The Temporary Extension Act of 2010 (TEA 2010), enacted March 2, 2010, further extended the period in which an individual can become eligible for the COBRA subsidy and expanded eligibility to certain individuals who become eligible for COBRA coverage as a result of a reduction in hours, which is then followed by an involuntary termination of employment. The Continuing Extension Act of 2010 (CEA 2010), enacted April 15, 2010, again extended the period in which an individual can become eligible for the COBRA subsidy.
Review our question and answer pages to find the information you need on:
Visit the Department of Labor Web site for information related to COBRA eligibility and the subsidy. Benefits advisors are also available to assist you at 1-866-444-3272.