AE-1
Q. Now that the legislation has passed, how is this going to be communicated to the employer/payroll community?

A. The IRS will continue to provide updated information through this Web site as it becomes available. (02/26/09)

AE-2
Q. What individuals are eligible for the COBRA subsidy?

A. An assistance-eligible individual can be any COBRA qualified beneficiary associated with the related covered employee, such as a dependent child of an employee, who is covered immediately prior to the qualifying event. The qualifying event for purposes of eligibility for the subsidy is involuntary termination of the covered employee’s employment that occurs during the period beginning Sept. 1, 2008, and ending Dec. 31, 2009. The individual must also be eligible for COBRA coverage, or similar state coverage, during this period. (02/26/09)

AE-3
Q. Is this provision for employees who involuntarily lose their jobs — or will it apply to all employees even if they leave voluntarily?

A. The credit applies only to involuntarily terminated employees and their family members who are qualified beneficiaries. (02/26/09)

AE-4
Q. Is the employer required to provide the COBRA subsidy?

A. The subsidy requirement applies to group health plans that are subject to the federal COBRA continuation coverage requirements or to similar requirements under state law. If you are an employer with such a plan and you receive a 35 percent payment from an assistance-eligible individual, you are required to make the remaining 65 percent payment. (02/26/09)

AE-5
Q. What if the employer’s group health plan is self-insured? Do the subsidy requirements apply?

A. Yes, the subsidy requirements apply to all plans subject to the COBRA requirements, including self-insured plans. In that case, the employer must provide the COBRA coverage if the assistance-eligible individual pays 35 percent of the otherwise required premium. The remaining 65 percent is treated as a payment of payroll taxes by the employer maintaining the plan. (02/26/09)

AE-6
Q. What other agencies will provide information about the COBRA subsidy?

A. Information about the COBRA subsidy will also be available through the Department of Labor and the Department of Health and Human Services, which, along with the IRS, share responsibility for the COBRA requirements. (02/26/09)

AE-7
Q. In order to be an assistance-eligible individual, must the individual actually have coverage under the group health plan at the time of the involuntary termination of employment?  

A. Yes. The individual must have actual group coverage at the time of the qualifying event, i.e., the involuntary termination of employment. The qualifying event must occur between Sept. 1, 2008, and Dec. 31, 2009, and the individual must be eligible for COBRA coverage at any time during that period. (03/05/09)

AE-8
Q. Is the COBRA benefit based on the former employee’s insurance coverage?  

A. In general, COBRA coverage is based on the same coverage that the individual had at the time of the qualifying event. However, under the COBRA subsidy provision, an employer may offer an assistance-eligible individual the option of choosing other coverage that is also offered to active employees and that does not have higher premiums than the coverage the individual had at the time of the qualifying event. (03/05/09)

AE-9
Q. Does the subsidy apply to medical and dental plans or medical only?   

A. The subsidy is generally available for COBRA continuation coverage under any group health plan, including medical, dental and vision coverage. However, it does not apply to a flexible spending arrangement (FSA) offered under a cafeteria plan. (03/19/09)

AE-10
Q. If an employer changes the insurance offered under its group health plan, can the subsidy apply to an assistance-eligible individual’s coverage under the new insurance?

A. Yes, as long as the individual’s coverage under the new insurance qualifies as COBRA continuation coverage and the individual otherwise continues to be eligible for the subsidy. (03/19/09)

AE-11
Q. What is the general process by which an assistance-eligible individual applies for the subsidy?

A. A group health plan is required to notify any individual with a qualifying event occurring during the period from Sept. 1, 2008 through Dec. 31, 2009, of the availability of the subsidy. If an assistance eligible individual already has COBRA coverage in effect on Feb. 17, 2009 (date of enactment), the individual should receive a special notice of the availability of the subsidy. The notices will explain how to apply for the subsidy. (03/19/09)

AE-12
Q. If an individual’s involuntary termination of employment took place on or after Sept. 1, 2008 and before Feb. 17, 2009, and the individual became eligible for COBRA coverage during that period, but the individual doesn’t have COBRA coverage in effect on Feb. 17, 2009, can the individual still elect COBRA coverage and get the subsidy?

A. Yes, if the individual’s right to continuation coverage is provided under federal law.  In that case, the individual will be given a new special election period to elect COBRA coverage and to pay reduced premiums as an assistance eligible individual. The special election period applies regardless of whether the individual failed to elect COBRA coverage previously or elected COBRA coverage and later discontinued it. The individual should be notified by April 18, 2009 of the new opportunity to elect COBRA coverage. The individual will then have 60 days after the notice to elect COBRA coverage and apply for the subsidy. (03/19/09)

AE-13
Q. What agency is responsible for providing guidance on these notice requirements?

A. The Department of Labor (DOL) is responsible for providing guidance on notices that must be provided about the availability of the subsidy and, if applicable, the special COBRA election period. For more information on the COBRA subsidy notice requirements, visit DOL’s COBRA page at www.dol.gov/COBRA, which contains model notices and other guidance on these provisions. You can also call 1-866-444-3272 to speak with a benefits advisor from DOL’s Employee Benefits Security Administration. (03/19/09)

AE-14
Q. How will the COBRA premium subsidy be provided retroactive to September 2008?

A. The COBRA premium subsidy is not retroactive. The earliest it can apply is for the first period of coverage beginning on or after Feb. 17, 2009, the date of enactment of the bill. In addition, if an individual elects COBRA coverage under the special COBRA election period, the coverage is effective only for the first period of coverage beginning on or after Feb. 17, 2009. In the case of a health plan that provides coverage on a calendar month basis, the first period of coverage is the month beginning March 1, 2009. (03/19/09) 

A-15
Q. Can an assistance-eligible individual reduce his or her COBRA premium to 35% immediately, rather than waiting for the notice from the health plan?

A. Yes. The subsidy applies as of an assistance eligible individual’s first period of coverage beginning on or after Feb. 17, 2009.  For example, it would apply to the premium for the period of coverage beginning March 1, 2009, in the case of coverage provided on a calendar month basis. However, because the COBRA subsidy provision was only recently enacted, systems to implement the premium reduction might not yet be in place. The assistance-eligible individual would therefore be well-advised to contact the group health plan or employer to discuss the premium reduction before sending in the reduced premium. (03/19/09)

AE-16
Q. Can an employer just reduce an assistance-eligible individual’s premiums to 35%, rather than notifying the individual about the subsidy?

A. No, because an individual might not be eligible for the subsidy. For example, the individual might be eligible for coverage under another group health plan and therefore not be eligible for the subsidy. (03/19/09)

AE-17
Q. Can an employer pay an assistance-eligible individual’s 35% share of the premium, rather than collecting it from the individual? 

A. No. The premium subsidy provision does not allow the individual’s 35% share of the premium to be paid by the employer.(03/19/09)

AE-18
Q. If I am an assistance-eligible individual, is there any other way to get the subsidy besides paying reduced premiums? For example, can I take it as a credit when I file my 2009 tax return?

A. No, the subsidy is provided to an assistance-eligible individual only in the form of reduced COBRA premiums. That is, the assistance-eligible individual only has to pay 35% of the premium in order to receive COBRA coverage. The employer is reimbursed for the remaining 65% through a credit on its payroll tax returns. (03/19/09)

AE-19
Q. Is an employer-initiated layoff an involuntary termination of employment for purposes of eligibility for the COBRA premium subsidy? 

A. Yes, an employer-initiated layoff is generally an involuntary termination of employment for purposes of eligibility for COBRA premium subsidy. (03/19/09)

AE-20
Q. Are tax-exempt entities subject to this provision? 

A. Yes, if the tax-exempt entity is required to provide COBRA continuation coverage. Moreover, an employer that is exempt from Federal income tax is generally subject to federal payroll tax requirements and required to file Form 941. As in the case of taxable employers, a tax-exempt entity can claim credit on Form 941 for the COBRA subsidy it provides. (03/19/09)

AE-21
Q. How will the COBRA credit apply in the case of a business acquisition that results in a successor employer? 

A. There is no “one size fits all” answer because the result depends on the facts and circumstances, including whether the entity that provided the subsidy continues in existence. The fact that an employer is a successor employer for purposes of applying the social security wage base does not mean that it can claim credit for the subsidy provided by the predecessor employer. (03/19/09)