Late last month the Senate passed legislation which included provisions to extend the COBRA subsidy in two ways:
- The duration of the subsidy has been increased from 9 to 15 months; and
- Individuals who are involuntarily terminated on or before February 28, 2010 are eligible to receive the subsidy.
The subsidy continues to be 65% of the assistance-eligible individual’s (AEI) COBRA premium and, in order to qualify as an AEI, the right to COBRA must derive from the involuntary termination of the employee.
An opportunity to retroactively receive the subsidy and maintain the COBRA coverage will be available for those individuals who lost eligibility for the subsidy when the 9 month period expired. To take advantage of this opportunity, the plan administrator will need to provide notification to these individuals and the individual will need to pay the premium within 60 days from the date of enactment or, if later, 30 days from notification.
Notification must be provided within 60 days from the date of enactment to all individuals who were AEIs on or after October 31, 2009. For qualified events that occur after enactment, the COBRA election notice will need to contain updated information on the subsidy.
DOL may issue revised notices to address these changes, but have not done so to date. In the interim, notification should simply be updated to comply with the new requirements.
Please note that the definition of eligibility has not changed: To be eligible for the ARRA subsidy, you must be an AEI on or before 2/28/10. Someone who terminates coverage on 2/28/10 but is eligible for COBRA on 3/1/10, is not eligible for the subsidy. Anyone who involuntarily terminated in December but believed that they would not be eligible for the subsidy because they would be COBRA eligible on January 1, 2010 (outside of the prescribed period under ARRA) will now be eligible to receive the subsidy (assuming they are otherwise eligible for the reduced COBRA premium).
It is possible that we may see the subsidy further extended. The House recently passed the Jobs for Main Street Act of 2010 containing (among other things) an extension of the eligibility period for the subsidy to June 30, 2010. The Senate is not expected to consider this legislation until next year so a further expansion of the subsidy does not appear imminent.
We will continue to monitor developments and keep you updated.