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Compliance Tips: Keeping Up With COBRA

The following list includes some of the actions that you, as an employer, should take to comply with the new COBRA rules enacted by the American Recovery and Reinvestment Act of 2009. As detailed in our article “Recent Changes to COBRA Require Immediate Attention,” the Act makes several significant changes to COBRA which may require your immediate attention.

• Identify all of the individuals who must be provided notice as required by the Act. Anyone who became entitled to COBRA on or after September 1, 2008 should be provided notice. This includes individuals who may have originally rejected coverage or who have stopped paying premiums.

• Identify the individuals who are eligible for the subsidy. Anyone who became or becomes entitled to COBRA on or after September 1, 2008, as a result of an employee’s involuntary termination of employment may be eligible for the subsidy.

• Prepare or have legal counsel prepare the notice required by the Act.

• Distribute the notice required by the Act no later than April 18, 2009, to anyone who became entitled to COBRA on or after September 1, 2008.

• Offer a second COBRA election period to individuals eligible for the subsidy who previously declined COBRA continuation coverage or lost COBRA continuation coverage due to a failure to pay the premiums.

• Determine the premiums that must be paid by individuals eligible for the subsidy.

• Determine what processes and procedures will need to be revised and/or implemented to recover the 65% premium subsidy. Use revised Form 941 and refer to lines 12a and 12b.

• Maintain supporting documentation for the premium subsidy taken as a credit against your payroll withholding taxes, such as verification that the employee was involuntarily terminated.

• Consider whether changes to the summary plan description or a summary of material modifications is necessary to reflect the new requirements.

Please note that there are likely other actions that you need to take or consider in coming weeks to ensure compliance. If you have any questions or concerns regarding how the Act will impact your COBRA administration or would like assistance implementing the changes, please contact Bingham McHale’s Labor and Employment Department.

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