revoceryGOVThis article was written by Connie Chuang and Gage C. Dungy, attorneys with the labor and employment law firm of Liebert Cassidy Whitmore.

The Federal Stimulus Package Incorporates New Temporary
Revisions to COBRA/Cal-COBRA, Including a Federal Subsidy for
Qualified Individuals.
Introduction
Federal law (COBRA – employers with 20 or more employees) and California law (Cal-COBRA
– employers with 2-19 employees) provide individuals who have experienced a “qualifying
event” the ability to continue their health insurance benefits for a period of up to 36 months by
having the covered individual pay up to 102% of the full health insurance premium cost.  A
“qualifying event” under COBRA/Cal-COBRA includes, among other reasons, voluntary
termination of employment, involuntary termination of employment (except for gross
misconduct), and a reduction in hours resulting in a loss of health benefits.
On February 17, 2009, President Barack Obama signed into law a federal stimulus package –
also known as the “American Recovery and Reinvestment Act of 2009” – in an attempt to
address the current economic downturn in the United States.  Included in this federal stimulus
package are some temporary revisions to the implementation of federal COBRA and state Cal-
COBRA health insurance premiums for qualified individuals who were involuntarily terminated
from their job (e.g., termination of employment or layoff that is not the result of gross
misconduct) between September 1, 2008 and December 1, 2009.  These temporary provisions
only apply to individuals affected by an involuntary termination, and not any other “qualifying
event” under COBRA/Cal-COBRA.  Therefore, individuals who voluntarily terminated their
employment or who had a reduction in hours resulting in a loss of health benefits are not covered
under these temporary COBRA/Cal-COBRA provisions of the federal stimulus package.
A full copy of the federal stimulus package’s COBRA provisions can be found at:
http://www.dol.gov/ebsa/pdf/COBRAPremiumReductionProvision.pdf
Below is a summary of the impact of these temporary revisions to COBRA/Cal-COBRA.
The Federal Stimulus Package Incorporates New Temporary Revisions to COBRA/Cal-COBRA, Including a Federal Subsidy for Qualified Individuals.

Federal law (COBRA – employers with 20 or more employees) and California law (Cal-COBRA – employers with 2-19 employees) provide individuals who have experienced a “qualifying event” the ability to continue their health insurance benefits for a period of up to 36 months by having the covered individual pay up to 102% of the full health insurance premium cost.

A “qualifying event” under COBRA/Cal-COBRA includes, among other reasons, voluntary termination of employment, involuntary termination of employment (except for gross misconduct), and a reduction in hours resulting in a loss of health benefits.

On February 17, 2009, President Barack Obama signed into law a federal stimulus package – also known as the “American Recovery and Reinvestment Act of 2009” – (or, visit Recovery.gov)in an attempt to address the current economic downturn in the United States.

Included in this federal stimulus package are some temporary revisions to the implementation of federal COBRA and state Cal-COBRA health insurance premiums for qualified individuals who were involuntarily terminated from their job (e.g., termination of employment or layoff that is not the result of gross misconduct) between September 1, 2008 and December 1, 2009.  These temporary provisions only apply to individuals affected by an involuntary termination, and not any other “qualifying event” under COBRA/Cal-COBRA.

Therefore, individuals who voluntarily terminated their employment or who had a reduction in hours resulting in a loss of health benefits are not covered under these temporary COBRA/Cal-COBRA provisions of the federal stimulus package.

See a full copy of the federal stimulus package’s COBRA provisions now.

Parts 2 and 3 of this article will be posted Friday July 3rd, and Monday July 6th. These parts will be providing a summary of the impact of these temporary revisions to COBRA/Cal-COBRA.

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