State Continuation Subsidy
Commercial Health Plans Small Groups (19 or fewer employees)

Mercy Health Plans (MHP) 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 who have experienced involuntary termination from employment and who qualify for state continuation coverage. 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 on or after February 17, 2009. Eligible members are responsible for 35 %of their state continuation premiums. The 65% balance is to be covered by MHP and will be reimbursed through a tax credit to MHP. 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 state continuation
• remit member’s 35% payment to MHP

Mercy Health Plans will:

• verify participant eligibility and enrollment in plan
• accept 35% of premium as payment in full
• administer member benefits
• apply for reimbursement through payroll tax credit

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.