The American Recovery and Reinvestment Act
The American Recovery and Reinvestment Act (ARRA), signed into law on February 17, 2009, made available a monetary subsidy to assist with dental, vision and health premiums, if you are involuntarily terminated from employment during the period from September 1, 2008 through December 31, 2009. The subsidy provides a 65 percent reduction in the premiums payable by involuntarily terminated workers and their families for continuation of coverage under COBRA, up to 9 months. For the 9 month period that you remain eligible, you will pay only 35% of the premium. Your former employer will be compensated the other 65% of the premium by the federal government.
For you or your qualified beneficiaries to be eligible for the ARRA premium reduction, the former employee must be COBRA-qualified and meets the following requirements:
- Was involuntarily terminated during the period beginning September 1, 2008 and ending December 31, 2009;
- Elects COBRA coverage when first offered or during the additional election period as required by ARRA;
- Is not eligible for other group health coverage (e.g., through a spouse’s plan); and
- Is not eligible for Medicare.
Note: You are eligible for the subsidy if you were involuntarily terminated after September 1, 2008 and did not elect COBRA within the 60 days or elected COBRA but dropped coverage. If you are currently enrolled and paid more than 35% of the premium, you will receive a credit towards future coverage or refund within 180 days.
The Act provides an Income Phase-out for highly compensative individuals, limiting their eligibility for the subsidy. Individuals earning more than $145,000 ($290,000 for joint returns) will have their income tax increased by the total amount of subsidy they receive. Individuals earning more than $125,000 but less than $145,000 (or more than $250,000 but less than $290,000 for joint returns) will have their income tax increased by a percentage of their total subsidy received in that year. Highly compensated individuals may also permanently waive out of the subsidy by completing the Highly Compensated Waiver of COBRA Subsidy Form. However, if waived, the subsidy cannot be claimed in a subsequent year, when income is below the threshold.
If you become eligible for coverage through Medicare or another group vision, dental, or health plan, you must notify the plan administrator immediately. For vision and dental call the Flexible Benefits Program at 404.656.2730, if calling locally, or toll-free at 1.888.968.0490. For the health plan call the State Health Benefit Plan (Health COBRA) at 404.651.6142, if calling locally, or toll-free at 1.800.483.6983. While you may remain eligible for COBRA, you will no longer be eligible to receive the premium reduction. Continuing to receive the premium reduction after becoming eligible for other coverage could result in a penalty equal to 110% of the premium provided to you after your eligibility ends.