December 22, 2009
As expected, President Obama extended the COBRA subsidy by signing HR 3326, the Department of Defense Appropriations Act of 2010 (DoDAA). Here are a few key changes:
• Eligibility originally scheduled to end on December 31, 2009 has now been extended two months to February 28, 2010, without regard to when the COBRA coverage period actually begins.• The maximum subsidy period is now 15 months (it was previously 9 months). This includes those individuals whose subsidy expired on November 30, 2009.
• Individuals whose subsidy ended on November 30, 2009, have an extended grace period of 60 days in which to pay their COBRA premium.
• Two new notifications are required. First, plans need to notify all individuals who were eligible as of October 31, 2009 or later of subsidy changes. A second notice needs to be sent to those who lost their subsidy to notify them of their extended payment grace period.
December 14, 2009
COBRA Subsidy Clarification
Individuals who become eligible for COBRA or state continuation coverage after December 31, 2009, will not qualify for the subsidy.The American Recovery and Reinvestment Act provision that provided eligible COBRA and state continuation participants with nine months of subsidized premiums will end December 31, 2009. Therefore, an individual who becomes eligible for COBRA or state continuation coverage after December 31, 2009, will not be eligible for the 65 percent subsidy.
This means that if an employee is terminated on December 31, 2009, that employee may be eligible for COBRA or state continuation but will not be eligible for the subsidy.
For more information on the COBRA subsidy, go to the U.S. Department of Labor website at www.dol.gov/ebsa/cobra.html.
December 7, 2009
The first wave of participants eligible for COBRA and state continuation subsidies are reaching the end of their nine-month subsidy period.
The American Recovery and Reinvestment Act provided eligible COBRA and state continuation participants with nine months of subsidized premiums. Participants who became eligible in this first wave on March 1, 2009, received a 65 percent premium subsidy through November 30, 2009. They will be responsible for paying 100% of the premiums beginning in December 2009. For example, if a participant's subsidized premium was $105 in November 2009, that premium will increase to $300 for December 2009. This is a significant increase and may be unexpected for some participants who may have lost track of the nine-month end date.Subsequent waves of the nine-month subsidy period will expire monthly hereafter. For example, the subsidy will expire on December 31, 2009, for COBRA and state continuation participants who became eligible on April 1, 2009. It will expire on January 31, 2010, for participants who became eligible on May 1, 2009, and so on.
COBRA employers currently receiving federal subsidy reports will continue to receive those reports as long as they have participants receiving the subsidy.
The subsidy program will end on December 31, 2009, for any new COBRA or state continuation applicants. Assuming there is no extension, the final wave of the nine-month subsidy period will end on September 30, 2010.
The government is currently considering an extension of the subsidy beyond the program's December 31, 2009, end date. We are monitoring this possibility. If there are any changes or an extension to the subsidy law, we will communicate that as soon as possible.
