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FMG Law Blog Line

Obama Signs COBRA Subsidy Extension

Posted on: December 22nd, 2009

By:  Kelly E. Morrison

On Saturday, December 19, President Obama signed H.R. 3326, a defense appropriations bill with a continuation provision that will let involuntarily terminated workers seek the temporary 65% Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy extension until February 28, 2010.

Congress created the COBRA subsidy program earlier this year, when it included the provision in the American Recovery and Reinvestment Act of 2009 (ARRA).

Under the original extension, the 65% subsidy was slated to last 9 months, with an application cut-off date of December 31.  Now, not only will the application cut-off date be extended to February 28, 2010, but the continuation subsidy will be extended from 9 to 15 months.

In addition to extending the eligibility period and the duration of COBRA benefits, the H.R. 3326 COBRA subsidy extension provision will make a number of changes in the subsidy program rules.

Specifically, the subsidy extension provision:

– Requires that employers send a special notice (within 90 days of the enactment of the extension) describing the new subsidy provisions to all “assistance eligible individuals” who have been on COBRA on or after November 1, 2009, or whose qualifying event is an “involuntary termination” of employment occurring on or after November 1, 2009;

– Allows for a 60-day period for the retroactive payment of premiums for “assistance eligible individuals” whose subsidy period expired November 30 and who failed to pay their premium for December coverage.

– Allows employees who are involuntarily terminated before February 28, 2010, but receive COBRA coverage that starts after February 28, 2010, to apply for the subsidy.

The U.S. Department of Labor, the U.S. Department of Health and Human Services, and the Internal Revenue Service may issue further guidance concerning the subsidy extension.

If you have any questions, please contact one of our Labor & Employment attorneys.

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