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Q:  Termination date was 11-21-2009. Severance agreement required that the employer pay up to 12 month's of my cobra. Starting with Feb the Employer began to get the Federal Stimulus Credit of 65% or there about. My question is three fold. 1. Can an employer inure to their benefit the Stimulus $ Credit or was this intended to help an employee who isd footing the Cobra bill 100%. I would have thought this was intended for Terminated Employee's and not Employer Corporations. 2. If I were to need to keep the Cobra coverage beyond the severance period (12mo's) I would be allowed Cobra for another 6 Mo's. If the Employer has grabbed the entire Stimulus $ available, would that mean when I become 100% responsible for the Cobra coverage I would be unable to get any of the intended Stimulus Credit Help? 3. If the employers were not be the recipient of the Stimulus Credit........ How should I deal with this?

A:  The American Recovery and Reinvestment Act of 2009 (also know as the federal stimulus package) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months.

The premium reduction for COBRA continuation coverage is available to "assistance eligible individuals".

An "assistance eligible individual" is the employee or a member of his/her family who:

·         is eligible for COBRA continuation coverage at any time between September 1, 2008 and December 31, 2009;

·         elects COBRA coverage; and

·         is eligible for COBRA as a result of the employee's involuntary termination between September 1, 2008 and December 31, 2009.

Those who are eligible for other group health coverage (such as a spouse's plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for premiums paid for periods of coverage prior to February 17, 2009.

If an individual’s modified adjusted gross income for the tax year in which the premium assistance is received exceeds $125,000 (or $250,000 for joint filers), then the amount of the premium reduction during the tax year must be repaid.

If you have any further questions as to the Cobra law you should visit the Department of Labors website, www.dol.gov they are the ones who oversee the Cobra law.