Client Alert

New COBRA Subsidy Requires Prompt Action by Employers and Plan Administrators

February 19, 2009

Eric Keller and Ethan Lipsig

The stimulus legislation, the American Recovery and Reinvestment Act (the Act), signed by President Obama on Tuesday creates a taxpayer-funded COBRA subsidy that imposes new notice, election and reporting requirements that require prompt action by employers and plan administrators. Employers that charge at least a portion of the COBRA premium virtually all employers who provide COBRA coverage -- do not have the option of offering COBRA without the subsidy. Consequently, virtually every employer that provides COBRA health coverage will have to take steps to implement the Acts COBRA subsidy provisions.

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