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Alerts
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IRS Issues Additional Guidance on COBRA Premium Subsidy
April 10, 2009
As we previously reported in “New Stimulus Package Creates Subsidy for Health Care Continuation Coverage” (SRZ Alert, March 9, 2009) and “Department of Labor Issues Model Notices for Subsidized COBRA Premiums”(SRZ Alert, March 20, 2008), the American Recovery and Reinvestment Act of 2009 (the “ARRA”) expands the rights of assistance eligible individuals under the Consolidated Omnibus Budget and Reconciliation Act of 1985, as amended (“COBRA”), by subsidizing 65 percent of their COBRA premiums. On March 31, 2009, the Internal Revenue Service issued Notice 2009-27 (the “Notice”). The Notice, which consists of 58 “Q&As,” provides information on a wide-range of topics related to the ARRA, including what constitutes an “involuntary termination,” who qualifies as an “assistance eligible individual,” how to calculate the premium reduction, what type of coverage is eligible for the premium reduction, and what is considered the beginning and end of the premium reduction period. The Notice also provides additional information on the recapture of the COBRA premium subsidy, the extended election period, payments to insurers, and the application of the subsidy rules to comparable state continuation coverage programs. This Alert sets forth some of the guidance covered in the Notice.
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