COBRA Subsidy Extended
Anne E. Zerbe
The Department of Defense Appropriations Act (Act) for 2010 was signed on December 19, 2009. The Act extended the eligibility period for the COBRA premium reduction for an additional two months and increased the maximum period for receiving the subsidy for an additional six months.
Under the ARRA of 2009, the eligibility period for the subsidy would expire on December 31, 2009. Eligibility was extended until February 28, 2010 for individuals who are involuntarily terminated on or before February 28, 2010. The Act also makes it clear 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.
In addition, the Act lengthens the maximum period for receiving the subsidy from nine (9) months to fifteen (15) months. The Act provides a retroactive period of 60 days to all eligible individuals on COBRA on or after October 31, 2009, or those individuals who are terminated after that date. To continue their coverage, eligible individuals 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. Employers and plan administrators will need to notify Assistance Eligible Individuals of the extended premium reduction period from 9 months to 15 months. This notice must be made on or before February 19, 2010.
The plan administrator must also notify individuals who were covered under COBRA and failed to timely pay the 35% premium or paid the full (100%) premium after the COBRA subsidy expired, of the changes made by the Act, including information on the ability to make retroactive premium payments at the reduced rate in order to maintain COBRA coverage. Affected individuals must be notified within 60 days of the date the COBRA coverage lapsed (due to nonpayment of premiums) or the date that they overpaid the premium.
As of the publication of this Alert, new model notices are currently not available for employers and plan administrators. Employers and plan administrators should prepare to send the required notices to any individual currently receiving the COBRA subsidy that the coverage period has been extended to 15 months and also sending a separate notice to individuals whose nine months of eligibility has expired. Employers may continue to check the Department of Labor’s COBRA website for more information.
In the coming weeks more details on the new notice requirements and form notices should be available. Please contact your CGA Employment Law attorney with questions.
