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IRS Issues New Guidance on COBRA Subsidy.  There have been some important new developments concerning the American Recovery and Reinvestment Act. 

The ARRA provides Federal subsidies of 65% of an eligible individual’s COBRA premiums and allows certain individuals who did not initially elect coverage or who later terminated coverage a second opportunity to elect coverage.  The ARRA applies to individuals covered by COBRA and also to individuals covered by Cal-COBRA. On April 1, 2009, the Internal Revenue Service provided guidance to employers on the ARRA.  In particular, IRS Notice 2009-27 provides some much needed specificity regarding when an employee has suffered an “involuntary termination” and is thus eligible for the subsidy.  Employers must provide new COBRA notices to eligible individuals by April 18, 2009.  The Department of Labor issued model notices on March 19, 2009.  The attached memo provides an overview of the ARRA and provides links to the model notices and the IRS guidance.  For further information, please contact Julia Jenness at Boutin Gibson Di Giusto Hodell Inc., 916.321.4444 or

 

pdfE-Alert 4-3-09 
 

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