The American Recovery and Reinvestment Act of 2009 includes amendments to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). COBRA generally provides eligible workers who lose their jobs and, as a result, their health insurance benefits, the opportunity to purchase continued health insurance benefits. Under the recent amendments, the federal government pays sixty-five percent of a former employee’s COBRA premiums. An individual may qualify for this subsidy if he or she was or is involuntarily terminated at any time from September 1, 2008 to December 31, 2009.

Employers are required to cover the cost of the reduced premiums initially, and then obtain reimbursement from the government through a tax credit. If the amount of the credit exceeds the amount of taxes due, the employer may recover the difference. The premium reduction lasts for up to nine months and applies to periods of health coverage beginning on or after February 17, 2009.

The new COBRA provisions require employers to notify eligible employees and former employees of the opportunity to receive COBRA coverage at the reduced rate. The notice requirements include the obligation to notify employees who previously declined coverage. These former employees must receive notice by no later than April 18, 2009. Sample notice forms are available on the Department of Labor’s Internet website, www.dol.gov.