Tuesday, March 31, 2009

COBRA Subsidy News

On February 17, 2009, the COBRA subsidy was signed into law. This is one of the most notable features of the ARRA or American Recovery and Reinvestment Act.

According to this plan, the employee will pay just 35% of the usual COBRA premium. If employees lose healthcare coverage due to termination, they will qualify for 65% government subsidy continued group insurance coverage.

The employee will pay just 35% of the usual COBRA premium. Under this plan, employees who lose healthcare coverage is due to terminate will qualify for a 65% government subsidy on continued group insurance coverage under COBRA.

A new U.S. Department of Labor COBRA subsidy fact sheet outlines this program. Under this program, the employer still pays the entire healthcare premium to the insurance company.

The employer can deduct 65% of the total premium from his or her payroll taxes. Under the ARRA COBRA subsidy, the employee pays $315, 35% of that amount. However, the employer can deduct $585 from his or her quarterly payroll taxes. The subsidy applies only to COBRA coverage since February 17, 2009, when the ARRA was signed into law.

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