Client Question: How will the ARRA affect groups under 20 employees covered by the State Mini-COBRA plan?
Answer. 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
Subsequent government publications have confirmed that that the extended COBRA benefits and subsidies under the American Recovery and Reinvestment Act of 2009 does in fact cover employers with fewer than 20 employees who are subject to a State program that provides coverage comparable to COBRA.
Labor and Employment Law: Current Developments 