COBRA deadline coming

Employers or their health plans have until April 18 to notify former employees of their right to pay reduced premiums for COBRA health insurance.

The economic stimulus legislation included a provision that enables workers who were terminated from their jobs between Sept. 1, 2008, and Dec. 31, 2009, to pay only 35 percent of their COBRA premiums for up to nine months. The federal government will subsidize the other 65 percent of the premiums, through a payroll tax credit provided to employers.

COBRA stands for the Consolidated Omnibus Reconciliation Act, a 1985 law that enables former workers to maintain their health coverage for up to 18 months after they leave an employer. In normal times, ex-workers pay both the individual’s and employer’s shares of the premiums.

The stimulus bill also allows terminated workers who declined to take COBRA coverage or discontinued COBRA coverage to change their minds. These workers also must be notified by employers or health plans.

The Department of Labor has prepared model notices for employers or their health plans to send to former employees. They can be downloaded at www.dol.gov/cobra.

The Internal Revenue Service, meanwhile, has released information on how employers should claim credit for COBRA premiums paid on behalf of their former employees. Employers will use the quarterly payroll tax return to claim this credit.