COBRA Continuation Subsidy
Commercial Health Plans Groups (20+ Employees)

Mercy Health Plans remains committed to helping members access affordable, quality healthcare. As part of the American Reinvestment and Recovery Act of 2009 (“Stimulus Plan Act”), Congress created a short-term subsidy for individuals on COBRA because they experienced involuntary termination from employment. The law also imposes an income threshold as an additional condition for qualification for this premium subsidy.

In accordance with the Stimulus Plan Act, members eligible for premium reduction include those who had an involuntary termination COBRA event between September 1, 2008 thru December 31, 2009. Eligible members are responsible for 35% of their COBRA premiums. The 65% balance is to be paid by the employer group on behalf of the member and will be reimbursed through a payroll tax credit to the employer. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts up to nine months. This subsidy is prospective only.

As a reminder, the following outlines responsibilities as both MHP and employer groups work together to implement the requirements of the law in the most seamless way possible.

It is the employer’s responsibility to:

• notify previous employees of their eligibility
• complete MHP applications for eligible members who elect COBRA
• accept the 35% of premium cost from the member, and pay the remaining 65%
• apply for reimbursement of their 65% contribution through a payroll tax credit

Mercy Health Plans will:

• verify participant eligibility and enrollment in plan
• accept COBRA payment from group
• administer member benefits

The Department of Labor website can provide more information and further detail regarding the requirements of the ARRA.

Visit the IRS website for information on administering the ARRA payroll tax credit.