Karla Grossenbacher and John Burgess Published in Employment Law Strategist
"The COBRA Subsidy in the Stimulus Package: What It Is and What You Need to Do Now."

Karla Grossenbacher and John Burgess’ article, “What It Is and What You Need to Do Now,” was published in the April 2009 issue of Employment Law Strategist. In their article, they discuss the American Recovery and Reinvestment Act of 2009 (ARRA or the “Act”) and explain what employers can do to prepare. According to Karla and John, under ARRA, certain individuals will now be eligible for a subsidy from the federal government for up to 65% of the cost of their Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums. They note, “In light of the current economic downturn, the COBRA subsidy is an attempt by the Obama administration to provide more affordable health insurance to certain individuals who have involuntarily lost their jobs.”

The authors outline steps for employers to take now to comply with the new COBRA obligations under ARRA. First, they suggest that employers provide the subsidy to “assistance eligible individuals” and provide second chance COBRA notices to affected individuals. Next, Karla and John advise employers to determine whether or not a lower cost coverage option will be offered. Finally, they note that employers should revise COBRA notices and Plan Documents before ARRA is enacted.

Karla and John conclude, “The COBRA provisions of the Act represent some of the most significant changes to this area of the law since COBRA was first enacted. Employers will need to adapt to these changes quickly to ensure compliance with ARRA.”