Notice 2009-27 by ProQuest


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									ance. This notice applies to Build Amer-                          tact Ms. Young or Mr. Jones at (202)                              amount of the premium. The employer
ica Bonds, including Recovery Zone Eco-                           622–3980.                                                         (or, in certain circumstances, the multiem-
nomic Development Bonds, issued after                                                                                               ployer health plan or the insurer) is reim-
February 17, 2009.                                                                                                                  bursed for the other 65 percent of the pre-
                                                                  Premium Assistance for                                            mium that is not paid by the assistance eli-
SECTION 8. PAPERWORK                                                                                                                gible individual through a credit against its
                                                                  COBRA Benefits
REDUCTION ACT                                                                                                                       payroll taxes.
                                                                                                                                        The premium reduction applies as of the
                                                                  Notice 2009–27
   The information collection contained in                                                                                          first period of coverage beginning on or
this notice has been approved by the Of-                             This notice provides guidance relating                         after February 17, 2009 (the date of en-
fice of Management and Budget (OMB) in                            to section 3001 of the American Recovery                          actment of ARRA). An assistance eligi-
accordance with the Paperwork Reduction                           and Reinvestment Act of 2009 (ARRA),                              ble individual is eligible for the premium
Act (44 U.S.C. chapter 35) under control                          Public Law 111–5, enacted February 17,                            reduction for up to nine months from the
number 1545–2143. Under the Paperwork                             2009, relating to premium assistance for                          first month the premium reduction provi-
Reduction Act, an agency may not conduct                          COBRA continuation coverage.                                      sions of section 3001 of ARRA apply to
or sponsor and a person is not required to                                                                                          the individual. The premium reduction pe-
respond to a collection of information un-                        BACKGROUND                                                        riod ends if the individual becomes eligible
less it displays a valid OMB control num-                                                                                           for coverage under any other group health
ber.                                                                  Section 3001 of ARRA provides for                             plan1 or for Medicare benefits.
   The collections of information in this                         a 65 percent reduction in the premium                                 The premium reduction does not ex-
notice are in Section 5. The information                          otherwise payable by certain involuntarily                        tend beyond the period of COBRA contin-
is required in order to inform the Trea-                          terminated individuals and their families                         uation coverage. An individual receiving
sury Department and the IRS of expected                           who elect COBRA continuation health                               the premium reduction who becomes eli-
future direct payments on Build America                           coverage under the provisions of the Inter-                       gible for coverage under any other group
Bonds. This information will be used to                           nal Revenue Code (Code), the Employee                             health plan or Medicare is required to no-
determine the expected amount of future                           Retirement Income Security Act of 1974                            tify the group health plan of eligibility for
direct payments on Build America Bonds.                           (ERISA), and the Public Health Service                            that other coverage. If the individual fails
The collections of information are manda-                         Act (PHS Act). (COBRA continuation                                to notify the group health plan, the individ-
tory. The likely respondents are state or lo-                     coverage under the Code, ERISA, and                               ual is subject to a tax penalty of 110 per-
cal governmental issuers of Build America                         the PHS Act is also referred to in this                           cent of the premium reduction improperly
Bonds.                                                            notice as “Federal COBRA.”) The pre-                              received after eligibility for the other cov-
   We estimate the total number of respon-                        mium reduction also applies to temporary                          erage.
dents to be 1,000 and the total annual re-                        continuation coverage elected under the                               Under ARRA, an employer may allow
sponses to be 5,000. We estimate it will                          Federal Employees Health Benefits Pro-                            an assistance eligible individual to elect
take 3 hours to comply. Estimates of the                          gram (FEHBP) and to continuation health                           coverage different from the coverage un-
annualized cost to respondents for the hour                       coverage under State programs that pro-                           der the plan in which such individual was
burdens shown are not available at this                           vide for coverage comparable to COBRA                             enrolled prior to the involuntary termina-
time.                                                             continuation coverage. For purposes of                            tion, and the premium reduction will ap-
   Books or records relating to a collection                      ARRA, continuation health coverage un-                            ply with respect to such different cover-
of information must be retained as long                           der all of these provisions is referred to as                     age. (This does not change the basic re-
as their contents may become material in                          “COBRA continuation coverage.”                                    quirement under Federal COBRA that a
the administration of any internal revenue                            Under the new provision, an assistance                        group health plan must allow a qualified
law. Generally, tax returns and return in-                        eligible individual is generally an individ-                      beneficiary to elect to continue the cover-
formation are confidential, as required by                        ual (1) who is a qualified beneficiary as the                     age in which the individual is enrolled as
26 U.S.C. 6103.                                                   result of an involuntary termination dur-                         of the qualifying event.) If offered, the as-
                                                                  ing the period from September 1, 2008,                            sistance eligible individual has 90 days af-
SECTION 9. DRAFTING                                               through December 31, 2009, (2) who is el-                         ter receiving notice of the option to elect
INFORMATION                                                       igible for COBRA continuation coverage                            the other coverage. The premium for cov-
                                                                  at any time during that period, and (3) who                       erage offered under this option cannot ex-
   The principal authors of this notice are                       elects the coverage. Group health plans                           ceed the premium for the coverage the in-
Carla Young and Timothy Jones of the Of-                          must generally treat assistance eligible in-                      dividual had prior to the involuntary ter-
fice of Associate Chief Counsel (Finan-                           dividuals who pay 35 percent of the pre-                          mination. In addition, the coverage of-
cial Institutions and Products). For fur-                         mium otherwise payable for COBRA con-                             fered under this option must be coverage
ther information regarding this notice, con-                      tinuation coverage as having paid the full                        offered to active employees and cannot be

1 Eligibility for coverage under any other group health plan does not terminate eligibility for the premium reduction if the other group he
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