The New American Recovery and Reinvestment Act
The new American Recovery and Reinvestment Act, otherwise known as ARRA or the Stimulus Package, apportions COBRA costs between employers (65%) and employees (35%) for the first nine (9) months. The ARRA COBRA change applies to employees terminated between September 1, 2008 and December 31, 2009. ARRA also provides a tax credit for private, public, and non-profit employers for the full COBRA amount paid by the employer. The tax credit is applied to employment taxes through IRS Form 941. You can access IRS Form 941 at the Department of Treasury's website (www.irs.gov) or you can click here. Employees terminated between September 1, 2008 and the enactment of the ARRA on February 17, 2009 and their dependents have a newly created right to elect COBRA retroactively, and pay only the thirty five percent (35%) of the cost prospectively, if they elect benefits. Employers must notify current and former employees about the COBRA premium reduction. The U.S. Department of Labor ("DOL") has just issued four (4) new forms for use with the ARRA's COBRA change. These include a:
- General Notice (full version)
- General Notice (abbreviated version)
- Alternative Notice, if state law applies
- Notice In Connection With Extended Election Periods
You can access these forms on the DOL website (www.dol.gov/ebsa/COBRAmodelnotice) or click here. DOL has also issued helpful guidance in question and answer format.
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