COBRA subsidy extended
Congress extends the COBRA Premium Subsidy
More individuals who experience involuntary termination will now qualify for the COBRA subsidy.
The COBRA premium subsidy has been extended to individuals who are involuntarily terminated through Feb. 28, 2010, and is now available for up to 15 months. These extensions passed as part of H.R.3326, the Department of Defense Appropriations Act of 2010.
Maximum duration
Individuals already receiving the COBRA subsidy will see their maximum duration automatically increase from nine months to 15 months as long as they remain eligible. New Assistance Eligible Individuals (AEIs) are entitled to the subsidy for up to 15 months as long as they remain eligible.
Timeframe extended
The bill also extends eligibility to individuals who experience a COBRA qualifying event due to the employee’s involuntary termination through Feb. 28, 2010.
Under the new rules, the COBRA qualifying event (involuntary termination) needs to occur on or before Feb. 28, 2010; it no longer matters when the coverage terminates.
The new rules also change a clause in the original legislation which was the source of much confusion. In the original COBRA subsidy rules, an individual had to be involuntarily terminated from employment and coverage must have ended by Dec. 31, 2009. The result of this rule was that people who were involuntarily terminated during December 2009 were not eligible for the subsidy if their coverage stayed in force through the end of the month.
New Notice Requirement
Employers are required to send a special notice to certain individuals describing the extension within 60 days of the enactment of the law.
Notice of the extension must be sent to:
- Any individual who was an AEI at any time on or after Oct. 31, 2009
- Any individual who experiences a COBRA qualifying event due to termination of employment on or after Oct. 31, 2009
Model Notices from the Department of Labor
The DOL has produced model notices which contain the new dates and requirements of the subsidy extension. The model notices can be found at: www.dol.gov/ebsa/COBRAmodelnotice.html.
Employers must also amend current COBRA notices to reflect the new period of eligibility and length of subsidy described above.
Retroactive Premium Payment
The rule also allows the following individuals an opportunity to retroactively reinstate their COBRA coverage, without interruption, by paying the premium within 60 days of the enactment of the law or, if later, within 30 days of receiving notification of the extension from the group health plan.
This rule applies to:
- Individuals whose subsidy has expired
- Individuals who failed to pay for their December premium
It is unclear in the legislation if the retroactive payment right would be extended to eligible individuals who did not pay for their COBRA premium for earlier months. The DOL is expected to issue additional guidance on this point and we will update you as soon as this issue is clarified.
The subsidy was originally enacted as part of the American Recovery and Reinvestment Act (ARRA) of 2009.
Disclaimer
This document is provided for informational and educational purposes only. It is not intended to, nor does it, provide any form of legal advice regarding the subject matter of the documents. You should not take any actions on the basis of this document, but instead should seek legal advice regarding your issues.
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