COBRA Subsidy Extension

This post by Drinkwater Law Offices

Posted in Alerts, Employees, Human Resources, Insurance

By Tracy McKenzie, Esq.

American_Recovery_and_Reinvestment_Act_of_2009.svgOn December 19, 2009, President Obama signed a new law amending the COBRA subsidy provisions of the American Recovery and Reinvestment Act of 2009 (“ARRA”).  Under the ARRA, individuals who were involuntarily terminated during the coverage period from September 1, 2008 through December 31, 2009, and were eligible for continuation of health care benefits pursuant to COBRA, could have 65% of their COBRA premium subsidized by the federal government for up to nine months.  The Department of Defense Appropriations Act 2010 amends the ARRA to extend the coverage period during which a termination occurs by two months, through February 28, 2010.  In addition, the new law also extends the maximum period for receiving the subsidy by an additional six months, for a total of fifteen months.  Eligible individuals who had reached the end of the initial nine month COBRA subsidy period before amendment of the law will now have an extension of their grace period to pay the reduced COBRA premium.  To continue their coverage, the eligible individual would have to pay 35% of the premium by February 17, 2010, or, if later, within thirty days after notice of the extension is provided by the plan administrator.  Similarly, individuals who lost the COBRA subsidy and paid 100% of the premium in December 2009 can contact their plan administrator or employer to seek a credit applied against future months of COBRA payments or a reimbursement of the overpayment.

Plan administrators or employers sponsoring health plans will be required to provide the COBRA subsidy notices required by the ARRA.  Employers should determine whether the administrator of their health insurance plan or the employer is responsible for providing notices under the COBRA subsidy extension.  More information regarding the COBRA subsidy extension may be found at www.dol.gov/ebsa/cobra.html.

© 2009 Drinkwater Law Offices

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