The Economic Stimulus Package and How It Addresses Cobra Subsidiary

Economic Stimulus Update – COBRA

Yesterday, the stimulus package made it through the Conference Committee and now heads back to the House and Senate for a final vote. The legislation prepared by Congressional staff indicates that the agreement calls for the following with respect to COBRA:
A 65 percent premium subsidy for eligible workers for 9 months.

The Department of Treasury will administer the subsidy through a mechanism that allows employers (or health plans if they administer COBRA benefits) to receive a credit against payroll taxes.

Individuals with annual incomes above $125,000 (single) or $250,000 (couples) would be eligible, but they can be taxed, and subject to a recap of the subsidy.

There is nothing in the summary to indicate that the agreement retains the House 55/10 provision allowing for the extension of COBRA coverage. The 55/10 provision would allow individuals 55 years or older and individuals who were employed 10 years or longer to remain on COBRA until they are eligible for Medicare.

It appears that the March 1st effective date is still intact, but with a 60 day grace period to perform retroactive adjustments. We will continue watching and let you know the outcome, and how it affects your business.