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COBRA Subsidy Teleconference

March 4, 2009

On March 4, 2009, McGuireWoods Employee Benefits and Executive Compensation teams hosted a teleconference on the implementation of the COBRA premium subsidy provisions included in the economic stimulus act. The American Recovery and Reinvestment Act (ARRA) includes a temporary government premium subsidy for COBRA coverage for individuals involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009. The subsidy is 65% of the premium for up to nine months. The government portion will be satisfied by the employer’s payment of the subsidy with a subsequent credit in the amount paid against payroll taxes. For most plans, the new subsidy provisions become effective for coverage March 1, 2009. Because of the short lead time to comply, employers required to provide COBRA continuation rights to former employees need to begin compliance efforts immediately. Topics include notice, election, and reporting requirements; required employer prepayment of COBRA premium subsidy; and payroll tax credit for the subsidy..

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