The Department of Labor recently updated its site to provide information related to the COBRA subsidy under the American Recovery and Reinvestment Act, that was signed into law by President Obama on February 17, 2009.   The Act contains a number of provisions affecting continued health care coverage under COBRA. Under ARRA, certain employees (and their qualified beneficiaries) whose employment is involuntarily terminated between September 1, 2008 and December 31, 2009 will be able to continue health coverage under COBRA by paying only 35% of the ordinary COBRA premiums for up to nine months. The employer will be responsible for the remaining 65% but will recover the subsidy from the federal government through a credit against its payroll tax liabilities or through direct reimbursement. ARRA also imposes new notification obligations upon employers, with penalties for failure to comply. An IRS guidance and the new IRS Form 941 can be found here.

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