COBRA Subsidy Extended
December 22nd, 2009 | By Paul ChernerOn December 21, 2009, President Obama signed the Department of Defense appropriations bill. Buried within that lengthy legislation are provisions that extend the COBRA subsidy for certain employees who have been or will be involuntarily terminated during a designated period of time.
The following are some of the key points of this new legislation, which becomes effective December 31, 2009:
1.) The subsidy (65% of the COBRA premium which is paid by the federal government through payroll tax credits) will be offered to employees who are involuntarily terminated and become eligible for COBRA before February 28, 2010.
2.) The length of time that an individual can receive the COBRA subsidy has been increased from the prior limit of nine (9) months to a new limit of fifteen (15) months.
3.) The extension to fifteen (15) months is retroactive to all individuals currently receiving the subsidy and will apply to any individuals whose initial nine (9) month subsidy expired.
4.) The extension is also retroactive to those individuals who lost COBRA coverage because they stopped paying premiums after their nine (9) month subsidy expired. Those individuals may be able to re-enroll in COBRA and receive the additional subsidy without any gaps in coverage. Plan Administrators will need to identify such individuals and send them a notice of their right to this option.
The U.S. Department of Labor continues to issue: updated Fact Sheet, FAQs, Job Lost Poster and Poster for Employees and new Model Notices. It is important for employers and plan administrators to carefully review and monitor the situation for any individuals who are or were eligible for the COBRA subsidy or who become eligible for it before February 28, 2010 and to ensure that timely notices of their rights are being sent. On January 22, 2010, the USDOL held a compliance webcast re the extension of the COBRA subsidy, which you can view by clicking on this archive.
