COBRA Premium Subsidy Eligibility Extended Through February 28, 2010

Date: 12/26/09
Title: COBRA Premium Subsidy Eligibility Extended Through February 28, 2010

The Employee Benefits Security Administration (EBSA) has extended the eligibility date for the Consolidated Omnibus Budget Reconciliation Act (COBRA) premium subsidy for two additional months under the American Recovery and Reinvestment Act (ARRA).On December 19, 2009, the extension of the 2010 Defense Appropriations Act was signed into law.  The Act addresses the following two areas:

1.       Extends the eligibility period for the COBRA premium reduction for employees who are involuntarily terminated on or before February 28, 2010; and

2.       Lengthens the maximum period to 15 months for receiving the subsidy. 

According to the EBSA, "Individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have additional time to pay the reduced premiums related to the extension. To continue their coverage they must pay the 35% of premium costs by (60 days after date of enactment) or, if later, 30 days after notice of the extension is provided by their plan administrator.

The Act also states that eligibility for COBRA need not occur on or before February 28, 2010, in order for an individual to be eligible for the subsidy, so long as the qualifying event that makes the individual eligible for the subsidy occurs on or before February 28, 2010.

Under the Act, group health plan administrators and/or employers must provide notice to individuals who, on or after October 31, 2009 were “assistance eligible individuals” or who experienced a qualifying event allowing for COBRA.  The notice must be sent within 60 days of enactment or by February 17, 2010.  If a qualifying event occurs after December 19, 2009 the notice must be sent within 44 days of the qualifying event and include information regarding the Act.

For those employees who cease to pay their COBRA premiums or paid it in full during the original 9 month subsidy period must be given a separate notice informing them of their eligibility to retroactively reinstate their coverage.  In order to do so, these employees must pay the subsidized premiums, or if they paid in full, receive a refund of premiums paid.

Additional assistance can be sought through the EBSA Benefits Advisor at 1-866-444-3272 or at http://www.dol.gov/ebsa/cobra.html

The foregoing has been prepared for the general information of clients and friends of Workplace Dynamics LLC.  It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel.