COBRA Subsidy is Extended Yet Again

Posted on April 22, 2010 by Randi W. Kochman

The COBRA subsidy about which we have recently written several times, has been extended again and is now available for “involuntary terminations” through May 31, 2010. As we wrote in our recent posts, the COBRA subsidy provides that “assistance eligible individuals” are responsible for only 35% of their COBRA premiums during the subsidy period and employers are responsible for the remaining 65% of the premium, but receive a payroll tax credit for this cost. The COBRA subsidy was originally set to expire on December 31, 2009, but was extended to February 28, 2010, then to March 31, 2010, and now to May 31, 2010.

Employees who are involuntarily terminated between September 1, 2008 and May 31, 2010 are eligible for the COBRA subsidy for up to 15 months. This period is measured from the first day of the first period of coverage for which the individual is eligible. Additionally, the subsidy is available to individuals who were subjected to a reduction of hours between September 1, 2008 and May 31, 2010, followed by an involuntary termination occurring between March 2, 2010 and May 31, 2010. Such individuals are eligible for the COBRA subsidy regardless of whether they elected COBRA coverage at the time of their reduction in hours.
 

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COBRA Subsidy Is Extended Again

Posted on March 18, 2010 by Michael N. Morea

On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (the "Act"), which extends COBRA subsidy eligibility through March 31, 2010. As we wrote in our January 10, 2010 post, the COBRA subsidy provides that assistance eligible individuals are responsible for only 35% of their COBRA premiums during the subsidy period and employers are responsible for the remaining 65% of the premium, but receive a payroll tax credit for the cost. The COBRA subsidy was originally set to expire on December 31, 2009, but was extended to February 28, 2010. The Act is a stop gap measure while Congress considers legislation that could further extend the COBRA subsidy through December 31, 2010.

Under the Act, employees who are involuntarily terminated between March 1, 2010 and March 31, 2010, are eligible for the COBRA subsidy. Additionally, the Act expands eligibility to cover individuals who were subjected to a reduction of hours between September 1, 2008 and March 31, 2010, followed by an involuntary termination occurring between March 2, 2010 and March 31, 2010. Such individuals are eligible for the COBRA subsidy regardless of whether they elected COBRA coverage at the time of their reduction in hours. The Act also provides further guidance to employers regarding their determination as to whether an employee's termination was involuntary.

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President Obama Extends the COBRA Premium Subsidy Period Until February 28, 2010

Posted on January 10, 2010 by Randi W. Kochman

On December 21, 2009, President Obama signed into law the Department of Defense Appropriations Act of 2010 (the “Act”). Among other things, the Act extends the COBRA premium subsidy previously enacted by the American Recovery and Reinvestment Act (“ARRA”), from December 31, 2009 until February 28, 2010. As most employers are aware, and as discussed in our March 6, 2009 post, under ARRA, assistance eligible individuals are responsible for 35% of the premiums during the subsidy period and employers are responsible for 65% of the premium, but receive a payroll tax credit for the cost.

The Act makes clear that the qualifying event (involuntarily termination other than for gross misconduct or reduction in hours, which causes a loss of coverage) must occur before February 28, 2010. The individual need not actually lose coverage before February 28, 2010 to be eligible for the extended subsidy. This provision differs from ARRA, which required both the qualifying termination and the loss of coverage to occur before the end of the subsidy period. The Act also extends the subsidy period from nine (9) months to fifteen (15) months.

In addition, employers should be aware that the Act imposes upon them additional notice requirements. By February 17, 2010, employers must provide additional notice to assistance eligible individuals informing them of the changes made by the Act. In the event of a qualifying event occurring after December 19, 2009, the employer must give notice to assistance eligible individuals of their COBRA subsidy rights, consistent with the requirements of the ARRA.
 

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