The Internal Revenue Service (IRS) recently provided guidance to employers in response to questions about the interpretation of the premium assistance subsidy for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
This subsidy was established as a part of the American Recovery and Reinvestment Act of 2009 (ARRA) and provides a premium reduction for health insurance as well as additional opportunities to elect COBRA continuation coverage for employees who were "involuntarily terminated" between September 1, 2008, and December 31, 2009, and their eligible family members, also known as Assistance Eligible Individuals (AEIs). As a result, these individuals must receive notification of the premium subsidy and in some cases the ability to re-elect coverage through an "Extended Election."
The IRS guidance, known as Notice 2009-27, uses several example scenarios to define "involuntary termination" and provides other interpretive guidance about the mandate. In addition, the Department of Labor recently issued model COBRA notices related to the ARRA, including an "extended election" notice which must be mailed to qualifying AEIs by April 18, 2009.
For more information, contact Tamika Carter at (703) 837-5382 or cartert@agc.org.
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