Employee Benefits Security Administration
U.S. Department of Labor
COBRA Provisions in the
American Recovery and
Reinvestment Act of 2009
Compliance Assistance
Webcast
EBSA

Overview
QBs can pay a reduced premium of 35%

Remaining 65% reimbursed to

employer, plan, or insurer payroll tax
credit
Can last up to 9 months

Affects periods of coverage beginning

on or after 2/17 (generally March 1)
Available for both Federal and State

coverage
Includes second election period

EBSA

Assistance Eligible Individual
Generally, an individual:

Who is qualified beneficiary as the
result of the involuntary termination
of employment during the period from
September 1, 2008 through December
31, 2009
Who is eligible for COBRA
continuation coverage at any time
during the period
Who elects coverage
EBSA

Tax Mechanics
Tax treatment for individuals

Tax treatment for employer, plan, or

issuer
Form 941

Overpayments and reconciliations

EBSA

Maximum Duration
Premium reduction generally available
 From later of:
Beginning of COBRA continuation
coverage; or date of enactment.
 Until earliest of:
9 months;
Eligibility under other group health
plan or Medicare; or
End of COBRA continuation period.
EBSA

Recapture/Penalty Tax
If assistance eligible individual fails to

notify plan of eligibility for other
coverage, 110 percent tax generally
applies to premium assistance received
after eligibility
If assistance eligible individual’s income

for year exceeds certain levels, all or part
of premium assistance received is
recaptured with a 100 percent tax.
EBSA

Extended Election Period
ARRA provides second chance to elect COBRA for certain
individuals who do not have a COBRA election in effect on
the date of enactment.
 Election limited to individuals who are qualified
beneficiaries as the result of an employee termination
during period from September 1, 2008 to December 31,
2009 under plan subject to Federal continuation
coverage, and either did not elect COBRA continuation
coverage, or who elected it but subsequently
discontinued COBRA.
 The individual has 60 days after receiving the notice to
make the election.
 Resulting COBRA coverage begins with the first period
of coverage after enactment (generally March 1).
 Period from loss of coverage to coverage under election
ignored for purposes of determining if preexisting
condition exclusion applies.
EBSA

General Notice
Plans subject to the Federal COBRA provisions
must send the General Notice to—
 All qualified beneficiaries (not just covered
employees),
 Who experienced a qualifying event at any time
from September 1, 2008 through December 31,
2009 (regardless of the type of qualifying event),
AND
 Who either have not yet been provided an
election notice or who were provided an election
notice on or after February 17, 2009 that did not
include the additional information required by
ARRA.
EBSA

General Notice (continued)
 An abbreviated version of the General Notice
that includes the same information as the full
version regarding the availability of the
premium reduction and other rights under
ARRA, but does not include the COBRA
coverage election information may be sent in
lieu of the full version to—
 Individuals who experienced a qualifying
event during on or after September 1, 2008,
 Have already elected COBRA coverage,
and
 Still have it.
EBSA

Alternative Notice
Insurance issuers that provide group

health insurance coverage must send the
Alternative Notice to persons who
became eligible for continuation
coverage under a State law.
Continuation coverage requirements

vary among States, and, in addition to
providing the information related to
ARRA, issuers should conform these
notices to applicable State law.
EBSA

Notice in Connection with
Extended Election Periods
Plans subject to the Federal COBRA provisions must send
the Notice in Connection with Extended Election Periods to
any assistance eligible individual (or any individual who
would be an assistance eligible individual if a COBRA
continuation election were in effect) who:
1. Had a qualifying event at any time from
September 1, 2008 through February 16, 2009; and
2. Either did not elect COBRA continuation
coverage, or who elected it but subsequently
discontinued COBRA.
This notice must include information on ARRA’s
additional election opportunity, as well as premium
reduction information and must be provided by April 18,
2009.
EBSA

Expedited Review
If the plan determines that you are not eligible for

the premium reduction, you can request an
expedited review of the denial.
The Department of Labor will handle appeals related

to private sector employer plans subject to ERISA’s
COBRA provisions.
The Department of HHS will handle appeals for

local governmental employees, as well as appeals
related to group health insurance coverage provided
pursuant to state continuation coverage laws.
The Departments are required to make a

determination regarding your appeal within 15
business days after receiving your completed
application for review.
EBSA

Expedited Review (continued)
Appeals to the Department of Labor must

be submitted on a specified form. The form
will be made available at
www.dol.gov/COBRA and can be
completed online or submitted via mail or
fax as indicated in the instructions.
EBSA

Additional Resources
Guidance and other information is available on

the Department of Labor web site at
www.dol.gov/COBRA. You can also call
1.866.444.3272 to speak to an Employee Benefits
Security Administration Benefits Advisor.
Information about ARRA’s premium reduction

provisions is also available from the IRS and the
Department of Health and Human Services,
which, along with the Department of Labor,
share responsibility for COBRA and the new
requirements added by ARRA.
EBSA

Questions?
EBSA