The federal American Recovery and Reinvestment Act of 2009 (ARRA) provides for COBRA premium subsidies for the newly-unemployed, but dies not stop with COBRA. ARRA extends the same rights to emplpyees in states with COBRA-like plans for smaller employers. New Jersey is one of those states. So NJ employers must be prepared to deal with ARRA’s requirements.
Under ARRA, certain individuals who are eligible for COBRA continuation health coverage, or similar coverage under State law, may receive a subsidy for 65 percent of the premium. These individuals are required to pay only 35 percent of the premium. The employer may recover the subsidy provided to assistance-eligible individuals by taking the subsidy amount as a credit on its quarterly employment tax return. The employer may provide the subsidy — and take the credit on its employment tax return — only after it has received the 35 percent premium payment from the individual.
Check out the IRS guidance at http://www.irs.gov/newsroom/article/0,,id=204708,00.html. As of 3/5/09 the NJ department of Banking and Insurance had nothing on its website about the new law.
