COBRA Subsidy Extended
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Anne E. Zerbe
The Defense Appropriations Act for 2010 was recently signed in to law extending not only the eligibility period for the COBRA premium reduction for an additional two months but also increasing the maximum period for receiving the subsidy for an additional six months.
Under the ARRA of 2009, the eligibility period was set to expire on December 31, 2009. Eligibility has now been extended for individuals who are involuntarily terminated on or before February 28, 2010. The Act also makes 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 months to fifteen (15) months. Under the Act, individuals who 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. Employers and plan administrators will need to notify Assistance Eligible Individuals of the extended premium reduction period from 9 months to 15 months.
As of the publication of this Alert, new model notices and requirements are currently not available for employers and group health plan administrators. Employers and TPAs should consider sending 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.
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.
