The IRS has issued Notice 2009-27 which provides a thorough interpretation of Section 2001 of the American Recovery and Reinvestment Act of 2009 (“ARRA”) relating to premium assistance for COBRA continuation coverage.

Notice 2009-27 provides information in a question and answer format regarding various parts of the ARRA like:

1. What does “involuntary termination” mean?
2. Who is an “assistance eligible” individual?
3. How are premium reductions (or subsidies) calculated?
4. What plans are subject to the COBRA subsidy?
5. When does the premium reduction/subsidy apply?
6. How does the “extended” (or “second chance”) election opportunity work?

While lengthy, Notice 2009-27 provides helpful guidance and examples for employers trying to understand and comply with this new COBRA subsidy obligation. We are attaching a copy of the Notice and recommend that employers read it and contact their legal counsel with any questions.