Keeping you informed of legislative changes that may affect you and your employees is one of our goals. See below...
December 22, 2009
President Obama on Monday signed H.R. 3326, a measure that extends a federal COBRA subsidy program to help laid-off workers pay for continued health insurance coverage.
The law extends the subsidy an additional six months. Those eligible will now be able to receive the subsidy for a total of 15 months, instead of the current nine.
The law also extends eligibility two months. The date for eligibility was set to expire on Dec. 31, but has been extended to workers laid off between Jan. 1 and Feb. 28, 2010, in addition to those let go between Sept. 1, 2008, and Dec. 31, 2009, under the original program.
The COBRA premium subsidy was a provision included in the American Recovery and Reinvestment Act, which was enacted by Congress in February. Eligible individuals for the subsidy pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit.
The new provisions also do the following:
- Expand the ARRA premium subsidy to 15 months (an increase from the nine-month period under the original provisions);
- Allow for a 60-day period for the retroactive payment of premiums for assistance eligible individuals ("AEIs") (i.e., individuals who were entitled to the subsidy) whose subsidy period expired on November 30th and who failed to pay their premium for December coverage. The period will commence the day the provision is signed into law by the president, or, if later, 30 days after provision of the special notice (described below). The same refund/credit rules under the original bill will apply to any assistance eligible individual ("AEI") whose subsidy expired in November and who has since paid the full COBRA premium;
- Require a special notice describing the new subsidy provisions to all AEIs who are on COBRA on or after November 1, 2009 or whose qualifying event is an "involuntary termination" of employment occurring on or after November 1, 2009;
- Conditions eligibility for the COBRA subsidy on only one factor: a qualifying event that is an "involuntary termination" of employment occurring on or before the new February 28, 2010 sunset date. The previous version of the subsidy also took into account when the COBRA coverage period actually began. This means that employees who are involuntarily terminated before February 28, 2010 but still receive coverage subsidized by employers that defers the COBRA start date to a date later than February 28, 2010 will still be able to receive the subsidy.
The bill requires employers to notify current and future Cobra participants of the extended 15-month eligibility.
Please call us if you have questions or need help understanding your responsibilities regarding the new COBRA subsidy.
Dale Soldevila
Soldevila & Associates
504-834-3639
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