The Department Labor and the IRS are still working hard on creating guidance on implementing the 65% COBRA premium subsidy enacted in the stimulus law. They held a two-hour webcast yesterday for employers, their third-party administrators, and insurance companies. Officials from the Department of Labor, Depart of Treasury, and the IRS presented. Although it’s primarily targeted at employers, the webcast can be very helpful for the laid-off employees as well. If you or someone you know are potentially eligible for the COBRA subsidy, watch the webcast.
The webcast archive will be available from now through June 23. It requires registration, but you don’t have to give your real personal information. You can just use [email protected] because I registered with that address already. If you don’t have two hours for the webcast, read the slides.
The COBRA subsidy is a subsidy paid directly to the employers. It’s not taxable to the employees.
A key requirement for receiving the COBRA subsidy is losing health benefits by "involuntary termination." A layoff is clearly involuntary termination. It gets a little fuzzy in other situations. What if the employees are in furlough? Officially they are still employees but the employer told them not to come in until further notice. According to the officials, that is involuntary termination for the purpose of COBRA premium subsidy. What if an office or plant is closing and the employees are asked to relocate but someone is unwilling to move? That counts as involuntary termination too. What if an employer asked for volunteers to retire or resign, or else be laid off, and an employee took the offer? That counts too.
You see benefits administration can get so complicated. I’m glad I don’t work in that area any more. For example a domestic partner and a child can be covered by an employee with family coverage. If an employee is laid off, the employee and the child can be eligible for the COBRA premium subsidy. The domestic partner is also eligible for COBRA, but the incremental cost for covering the domestic partner is not eligible for the subsidy.
More info: FAQs on Department of Labor website