Recently I presented a program on the COBRA Subsidy. The link below provides the full PowerPoint presentation.
State Mini-COBRA Plans Eligible for Subsidy
Under Title III of the new American Recovery and Reinvestment Act of 2009 (ARRA), “assistance eligible” employees are entitled to a 65% subsidy for COBRA premiums for up to nine months. An assistance eligible employee is one who is (1) eligible for COBRA coverage, (2) elects such coverage, and (3) was involuntarily terminated from employment at any time on or between September 1, 2008 and December 31, 2009.
The Act defines “COBRA continuation coverage” as “coverage provided pursuant to [COBRA] or under a State program that provides comparable continuation coverage.” (emphasis added) It does not include coverage provided through a health flexible spending arrangement under a Section 125 cafeteria plan
The extended COBRA benefits and subsidies under the American Recovery and Reinvestment Act of 2009 do cover employers with fewer than 20 employees who are subject to a State program that provides coverage comparable to COBRA. These programs are are often referred to as “Mini-COBRA” plans.
Some Mini-COBRA plans may not qualify for the subsidy, however. In order to qualify, the insurance provided must be substantially the same as that which the terminated employee enjoyed before termination. In addition, there must be a cap on the premium and the premium must be some percentage of the group premium for active employees. For example, under COBRA the maximum premium is 102% of the active employee premium.
A number of states have short continuation periods, e.g., 6 months. Such programs still qualify for the COBRA subsidy if the premiums comply with the standard set under the ARRA.
If you are an employer with fewer than 20 employees, you should check your state “Mini-COBRA” statute. The majority of states have such a statute. The only exceptions as of this writing are AL, AK, AZ, DE, HI, ID, IN, MI, MT, PA,WA. Legislation is pending in Pennsylvania.
A number of states are either amending their laws or reviewing them in light of the ARRA COBRA provisions. Consequently, employers should monitor state legislation regularly.
Labor and Employment Law: Current Developments 