Extensions on COBRA subsidy allowed to end

The COBRA subsidy provided under the American Recovery and Reinvestment Act of 2009 (ARRA) will soon come to an end.  After several extensions, the subsidy will end by August 31, 2011, for most assistance eligible individuals (AEI) who lost medical coverage due to an involuntary termination of employment on or before May 31, 2010.

It is possible that a termination of employment occurred before May 31, 2010, but a loss in coverage did not occur until a later month, in which case coverage could be subsidized beyond August 31, 2011.

ARRA provided a 65 percent subsidy to an assistance eligible individual’s COBRA premium as long as the involuntary termination from employment occurred on or before May 31, 2010.  For these individuals, the subsidy was available for up to fifteen (15) months.

Larger employers were able to claim the subsidy on IRS Form 941 as part of payroll tax reporting once the reduced COBRA premium was received from the AEI. In the case of smaller employers, insurance carriers were entitled to this reimbursement.