Updated March 2010: Eligibility for the COBRA subsidy was extended to cover individuals who experience a qualifying event due to a reduction in hours or termination of employment through March 31, 2010. Bills are pending in the House and Senate to further extend the COBRA subsidy to individuals who experience a qualifying event after March 31, 2010.
On December 19, 2009, President Obama signed the Department of Defense Appropriations Act for Fiscal Year 2010 (H.R. 3326). Among the many provisions in the Defense Act was the extension and expansion of the COBRA premium subsidy program. As we previously posted in “Changes to COBRA Requires Employer Action” available here, the American Recovery and Investment Act of 2009 (the “ARRA”) provided that “assistance eligible individuals” (employees that were involuntarily terminated and elected COBRA) who were terminated on or after September 1, 2008, through December 31, 2009, could be subsidized at 65% of the cost of COBRA premiums for up to nine months. Under the Defense Act, this subsidy has been extended to a total of 15 months.
Eligibility Criteria
The following terminated employees are eligible for the subsidy:
- Any individual who is terminated after December 19, 2009, can receive subsidized coverage for 15 months.
- Any individual who is currently receiving the subsidy can receive an additional six months added on to the end of their original nine-month subsidy period, for a total of fifteen months.
- Any individual currently receiving coverage under COBRA who previously received the subsidy but exhausted their nine months of subsidized premiums. These individuals will have an opportunity to receive COBRA coverage at the subsidized rate, retroactive to the day the individual stopped receiving the subsidy, for an additional six months. If the individual paid the full COBRA price, the excess premium amount will be refunded or credited to the individual for future premium payments.
- Any individual who is currently eligible for COBRA but chose to no longer pay the COBRA premiums. These individuals will have the opportunity to have COBRA coverage restored at the subsidized rate for an additional six months, retroactive to the date the person terminated COBRA. To continue coverage, the individual must pay the 35% of premium costs by February 17, 2010, or, if later, 30 days after notice of the extension is provided by his or her plan administrator.
Links to model notices provided by the Department of Labor can be found on the Instant HR Solutions Free Resources page.
