COBRA Provisions in American Recovery and Reinvestment Act

The House of Representatives and the Senate have passed the American Recovery and Reinvestment Act (the "Act"), which is intended to provide stimulus to lead to an overall economic recovery.  The President signed the Act on Tuesday, February 17, 2009.  The Act, which is budgeted at $789 billion, provides funding for a variety of programs and an overall tax cut to American workers.  This memorandum will briefly focus on the changes that the Act makes to the coverage continuation provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), which are effective for the first period of coverage beginning on or after February 17, 2009.  In the case of a group health plan that provides and charges for COBRA continuation coverage on a calendar month basis, the effective date is March 1, 2009.  Not all the provisions regarding COBRA that were in the previous House and Senate bills were included in the final version of the Act (such as the extension of the COBRA continuation coverage period for older or long-service employees) but those legislative concepts may be raised again when Congress addresses health care reform.  Please see the attached memo for more information.