COBRA Subsidy Extended
On December 19, 2009, President Obama signed the 2010 Department of Defense Appropriations Act, which includes amendments to the Federal American Recovery and Reinvestment Act of 2009 that provided health care premium assistance for certain individuals.
Employers subject to state "mini-COBRA" laws, such as New York, will need to monitor developments under state law to see how their state responds to the changes made by the Act.
Eligibility and length of subsidy
The Appropriations Act does the following with respect to the 65% COBRA subsidy:
- Individuals who are involuntarily terminated through February 28, 2010, will be eligible for the subsidy (the previous date was December 31, 2009);
- The maximum subsidy period is extended to 15 months from the original nine months;
- Individuals whose subsidized COBRA coverage has already ended have until February 17, 2010 (60 days after the date of enactment, December 19, 2009) or 30 days after the notice of the extension is provided by their plan administrator, whichever is later, to pay the 35% subsidized premium amount and obtain retroactive coverage by the subsidized COBRA. If the full premium was already paid, the "overpayment" amount can be refunded or credited towards future coverage.
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, provided the qualifying event that makes the individual eligible for the subsidy occurs on or before February 28, 2010. For example, an individual who is involuntarily terminated on February 28, 2010 and becomes eligible for COBRA on March 1, 2010 would be eligible for the subsidy if he or she meets the requirements of an "assistance eligible individual."
New notice requirements
Under the Act, group health plan administrators (employers, generally) must provide an additional notice concerning the subsidy extension. The notice is required for individuals who, on or after October 31, 2009, either:
- Are "assistance eligible" individuals, or
- Experience a qualifying event consisting of a termination of employment relating to the COBRA continuation coverage.
The Act states that this notice generally must be sent by February 17, 2010 (within 60 days of enactment) unless a qualifying event occurs after December 17, 2009. In that event, the notice must be sent according to the existing COBRA rules (generally within 44 days of the qualifying event).
A separate notice is required for certain individuals who cease to pay their COBRA premiums or pay them in full during the original nine-month subsidy period. These individuals will be able to retroactively reinstate their coverage by paying the subsidized premiums, or in the case of those who paid in full, receive a credit or refund of the premiums paid.
Additional details, including sample notices, will be provided to HR Works' Helpline clients shortly after their upcoming anticipated release from the Department of Labor and the Internal Revenue Service. Helpline clients should contact the Helpline at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or at (585) 381-8340 ext. 1 with any questions.
Sources:
http://www.nylaborandemploymentlawreport.com/2009/12/articles/employee-benefits/2010-defense-appropriations-bill-impacts-cobra-subsidy/?utm_medium=twitter
http://www.jacksonlewis.com/legalupdates/article.cfm?aid=1934
