COBRA Subsidy ALERT
04-Dec-2009COBRA, State Continuation Subsidies Extended
On December 19, 2009, President Barack Obama signed an extension of the COBRA subsidy program originally introduced under the American Recovery and Reinvestment Act of 2009 (ARRA). [This provision was set to expire on 12/31/09 -- this is an important change for current COBRA participants.]
ARRA provides for a federal subsidy of 65 percent of the COBRA continuation coverage premiums for qualified beneficiaries receiving COBRA continuation coverage due to involuntary termination of employment between September 1, 2008, and December 31, 2009. These individuals, referred to as "assistance-eligible individuals" or "AEIs," were entitled to receive the subsidy for up to nine months.
Under the new COBRA subsidy extension provision:
On December 19, 2009, President Barack Obama signed an extension of the COBRA subsidy program originally introduced under the American Recovery and Reinvestment Act of 2009 (ARRA). [This provision was set to expire on 12/31/09 -- this is an important change for current COBRA participants.]
ARRA provides for a federal subsidy of 65 percent of the COBRA continuation coverage premiums for qualified beneficiaries receiving COBRA continuation coverage due to involuntary termination of employment between September 1, 2008, and December 31, 2009. These individuals, referred to as "assistance-eligible individuals" or "AEIs," were entitled to receive the subsidy for up to nine months.
Under the new COBRA subsidy extension provision:
- The end date of eligibility for the premium subsidy changes from December 31, 2009, to February 28, 2010.
- The ARRA premium subsidy period expands to 15 months, increased from current nine months.
- Those who have lost their subsidy by completing their nine months in November or later are grandfathered in under the new law and may receive six additional months of the subsidy.
- Employees who are involuntary terminated on or before February 28, 2010, are eligible for the subsidy, regardless of when their COBRA eligibility period begins. This addresses a congressional oversight in the original bill pertaining to December 31, 2009, qualifying events.
- Additional notices will be sent regarding the amendments to assistance-eligible individuals, as well as those who qualify for COBRA due to termination of employment.
- The provision also allows a period for the retroactive payment of premiums for assistance-eligible individuals whose subsidy period expired on November 16, 2009, and who failed to continue to pay their premiums.
- The same refund and credit rules under the original ARRA bill apply to any assistance-eligible individual whose subsidy expired in November and who has since paid the full COBRA premium.
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