One More Extension of the COBRA Subsidy

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April 16, 2010

Late on April 15 President Obama signed the Continuing Extension Act of 2010, and included within that law is yet another extension of the COBRA premium subsidy enacted last February as part of the American Recovery and Reinvestment Act of 2009 (“ARRA”). Our earlier updates on the ARRA COBRA premium subsidy can be found in “COBRA Provisions in the American Recovery and Reinvestment Act of 2009 (ARRA),” “COBRA Provisions Q&A and IRS Form 941,” “Employee Benefits Security Administration Issues Model COBRA Notices,” “IRS Hints at What an Involuntary Termination Means for Purposes of ARRA,” “Has the EBSA Played Scrooge with the ARRA COBRA Subsidy??,” “COBRA Subsidy Extended!!”, and “COBRA Subsidy Extended!! Again!!.” The COBRA subsidy extension enacted yesterday extends the eligibility period for the subsidy for two months (through May 31, 2010). This means that an individual who loses group health plan coverage due to an employee’s involuntary termination of employment that occurs through May 31, 2010 will be eligible for the subsidy. Prior to this extension, the termination of employment had to occur on or before March 31, 2010. Because of the gap in time between the original expiration of the subsidy (March 31, 2010) and this new legislation, a second chance at COBRA with the subsidy must now be offered to those who are now entitled to the subsidy due to the extension. Within 60 days of the enactment of this new legislation, group health plan administrators must notify all individuals who had a qualifying event due to involuntary termination of employment on or after April 1, 2010 that this second chance election is available. In the case where COBRA notices have not yet been provided to these terminated individuals, the notice that is provided must reflect the extension of the COBRA subsidy period. In order to minimize the use of refunds or credits, group health plan administrators are encouraged to issue the required notice as soon as possible. Previously issued model notices from the Department of Labor can be used (with some modification to reflect the extension) to communicate these changes to affected assistance eligible individuals.
If you have questions regarding the above, please contact Mary Ellen Schill, the author of this article, or any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

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