American Recovery and Reinvestment Act of 2009

 

ARRA has been enacted and has some far reaching effects on the way your company will handle COBRA and Ohio's State Continuation requirements.  As you know, employers will be subsidizing 65% of the cost for individuals on COBRA and the 65% subsidy also applies to state continuation.  Under ARRA, employers are eligible for the subsidy for up to 9 months.

 

Model Notices are now available on the Department of Labor's website.  If your company does not use ESP Benefit Design as your COBRA administrator, you should follow the guidelines from the Department of Labor regarding ARRA requirements. 

 

ARRA also affects employers that do not have to adhere to COBRA notification mandates (less than 20 employees.)  Model notices for employers in states with state continuation are also on the Department of Labor website.  In Ohio, employers with fewer than 20 employees have had to provide continuation of coverage for 6 months.  Even though the subsidy is available for 9 months under ARRA, the 6 month State Continuation benefit period remains intact and the 9 month ARRA requirement does not superceded the current State Mandate.

 

Employers will receive the funding for the 65% subsidy by reducing Federal Payroll Withholding. Instructions are detailed at the IRS Website.

 

Under state continuation in the State of Ohio, the situation will be handled quite differently.  The employer will only pay the insurer 35% of the insurance premium and the health insurer will pay the difference and be reimbursed by Federal Government.