COBRA Law Benefits Expanded

It’s commonly known as the “Stimulus Bill,” and is officially called the American Recovery and Reinvestment Act of 2009. This is the huge federal bill passed in February at the urging of President Barack Obama. While the overall idea was to stimulate the American economy, included in the bill’s details are unexpected benefits like the one that laid off employees will enjoy under COBRA. As most know, this federal law guarantees continued health care coverage for workers who lose their jobs, regardless of the reason. Under the Stimulus Bill, employers now must cover 65% of the COBRA premium for employees fired – or laid off, if that term is preferred, the distinction being meaningless in this context – between September 1, 2008 and December 31, 2009. This percentage must be paid for up to nine months, but applies only to periods of time between February 17, 2009 and the end of this calendar year. There are no required retroactive payments. Amounts paid out in benefits by employers will be reimbursed to them through tax credits, so the government ultimately foots the bill. Of course, businesses already strapped by the tough economy must make the initial outlay. They’ll be reimbursed reasonably quickly, however, through tax credits that can be taken as part of their quarterly employment tax filings.

The implementation of the bill is being handled by the U.S. Department of Labor. It has set up a web site with information at http://www.dol.gov/ebsa/cobra.html. Included is a recently published set of model notices for employers to deliver to workers who lose their jobs. There are four different notices intended to fit particular circumstances:

1. The General Notice goes to qualified beneficiaries of the COBRA law who either have not yet received notice of COBRA entitlement or got a notice after February 17, 2009 that did not include the new 65% benefit information. The model notice is posted at http://www.dol.gov/ebsa/COBRAgeneralnoticefullversion.doc.

2. The Abbreviated General Notice is shorter. Workers let got between September 1, 2008 and February 17, 2009 and who already received a COBRA notice get this one. It’s posted at http://www.dol.gov/ebsa/COBRAgeneralnoticeabbreviatedversion.doc.

3. The Alternative Notice is for use by insurance issuers to workers eligible for coverage under a state law. It may need to be modified to fit applicable circumstances. It’s posted at http://www.dol.gov/ebsa/COBRAalternativenotice.doc.

4. The Extended Election Notice goes to eligible former employees who were let go between September 1, 2008 and February 17, 2009 and who either did not elect COBRA benefits or elected and then discontinued them. This notice is posted at http://www.dol.gov/ebsa/COBRAextendedelectionperiodnotice.doc.

Attorney Jack Merrill is a Boston employment lawyer specializing in Massachusetts employment law and providing legal services to employees, employers and businesses throughout the Boston metro west and Worcester County region including Ashland, Dedham, Framingham, Franklin, Hopkinton, Maynard, Marlborough, Milford, Natick, Needham, Newton, Shrewsbury, Sudbury, Waltham, and Worcester, Massachusetts