ARRA or American Recovery and Reinvestment Act of 2009


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Note: The COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010; therefore the eligibility period for the subsidy has passed.




What is ARRA? American Recovery and Reinvestment Act of 2009 is a stimulus package to temporarily reduce the premium cost for COBRA coverage for “assistance eligible individuals”.

You are considered “assistance eligible individual” if:
1) you are eligible for COBRA continuation coverage at anytime from September 1, 2008 through December 31, 2009;
see below update on the COBRA extension!
2) you elected COBRA coverage (when first offered or during the election period provided by ARRA);
3) you experienced involuntary termination from September 1, 2008 through December 31, 2009.
Note: This has been extended to March 31, 2010.

Eligible individuals only pay 35% of the full COBRA premiums under their plan for up to 9 months.

Electing the reduced premium under ARRA may disqualify you for the Health Coverage Tax Credit. Individuals with higher income ($125,000 for single payer or $250,000 for married couples) may have to repay the reduced premium through an increase in their income tax.

In some cases, they may have to reimburse your employer for the portion they carried on your behalf.

Make sure you check with your Benefits Department if your income is close to the above threshold and there is a good chance you will reach the above limits.

For information regarding Health Coverage Tax Credit, go to: IRS.gov.

Note: You are ineligible if you are covered by other group health plan via your new employer or your spouse’s plan or Medicare. If your termination is due to gross misconduct, you or your dependents will generally not qualify for COBRA or reduced premium.

There are so much more information you need to know regarding COBRA continuation coverage. Additional information to help you make informed decision can be found at the Dept. of Labor website.

Educate yourself; weigh your options carefully, and make decision before your due date!!!!

Latest Update on Extension of American Recovery and Reinvestment Act of 2009

President Obama signed the Department of Defense Appropriations Act, 2010 (2010 DOD Act) on December 19, 2009. The 2010 DOD Act amended ARRA to extend the period to qualify for the COBRA premium reduction until February 28, 2010 and the maximum period for receiving the subsidy an additional six months (from nine to 15 months).

Note: Recent legislation has now extended the qualifying dates through March 31, 2010.

This also applies to anyone whose work hours were reduced from Sept. 1, 2008 to March 31, 2010, followed by an involuntary termination covering the period March 2, 2010 to March 31, 2010.

For additional information, please go to Department of Labor website.

Below is an update of COBRA Continuation under ARRA (American Recovery & Reinvestment Act) from the Department of Labor website:

COBRA Continuation Coverage Assistance Under ARRA

The American Recovery and Reinvestment Act (ARRA) provides a COBRA premium reduction for eligible individuals who are involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare.

The Unemployment Compensation Extension Act of 2010 signed by the President on July 22, 2010, did not extend the COBRA premium reduction. Individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare. If your COBRA continuation coverage lasts for more than 15 months, you will need to pay the full amount to continue your COBRA continuation coverage. See the Fact Sheet and FAQs for important information on maintaining your COBRA coverage after your subsidy expires.

Before the expiration of your COBRA coverage under ARRA occurs, take the time to shop around for an alternate coverage that might be cheaper than paying the full amount to continue your coverage under your former employer's plan. It pays to have enough time to shop around for the most economical rate based on your and your family's needs.

Note: The COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010; therefore the eligibility period for the subsidy has passed.


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