ARRA makes the premium reduction available for "assistance eligible individuals." An Assistance Eligible Individual is a COBRA-qualified beneficiary who meets the following requirements:

• Is eligible for COBRA continuation coverage at any time during the period from September 1, 2008 through February 28, 2010 (includes involuntary loss of employment by 2/28/10 where the COBRA start date is a later date);
• Elects COBRA coverage (when first offered or during the additional election period provided by ARRA); and
• The COBRA election opportunity relates to an involuntary termination of employment that occurred at some time from September 1, 2008 through February 28, 2010.

However, if the individual is eligible for other group health coverage (such as through a new employer’s plan or a spouse's plan) or Medicare, he/she is not eligible for the premium reduction.

If the employee's termination of employment was for gross misconduct, the employee and any dependents generally would not qualify for COBRA or the premium reduction.

Yes. Group health plans are permitted, but not required, to allow qualified beneficiaries to enroll in coverage that is different than the coverage they had at the time of the qualifying event. ARRA provides that changing coverage will not cause an individual to be ineligible for the COBRA premium reduction, provided that:

• The premium for the different coverage is the same or lower than the coverage the individual had at the time of the qualifying event;
• The different coverage is also offered to active employees; and
• The different coverage is not limited to only dental coverage, vision coverage, counseling coverage, a flexible spending account, or an on-site medical clinic.

If the plan permits individuals to change coverage options, the plan must provide the individuals with a notice of their opportunity to change. Individuals have 90 days to elect to change their coverage after the notice is provided.

The employer (or other responsible entity) may recover the subsidy provided to Assistance Eligible Individuals by taking the subsidy amount as a credit on its IRS Form 941 quarterly employment tax return.

For more information on the Form 941 credit and the tax provisions in ARRA, visit the IRS web site.

No. There is no premium reduction for premiums paid for periods of coverage prior to February 17, 2009.

If an individual meets the requirements of an Assistance Eligible Individual and pays 100 percent of the premium in March or April for coverage in those months, the overpayment can be applied as a credit toward subsequent premiums as long as it can be used within 180 days of the overpayment. Otherwise, the overpayment must be reimbursed to the individual within 60 days of receipt.