Extension of COBRA Subsidy
December 23, 2009
As was anticipated, legislation amending the American Recovery and Reinvestment Act of 2009 has been enacted that extends the eligibility period for the COBRA subsidy to February 28, 2010. In the absence of the amendment, the eligibility period would end December 31, 2009. In addition, the bill extends the duration of the subsidy from nine months to 15 months.
The legislation provides transition relief that permits an individual who was eligible for the subsidy on or after October 31, 2009, and who had elected COBRA coverage prior to December 19, 2009, to make retroactive premium payments to continue COBRA coverage. The premiums must be paid by February 17, 2010, or within 30 days of the date the plan administrator notifies the individual about the new legislation, whichever date is later. In general, the plan administrator must provide notice of the new legislation by February 17, 2010. However, for those individuals who have a COBRA qualifying event after the date of enactment, the notice of the new legislation must be provided under the same rules that have been in effect concerning the COBRA subsidy.
Finally, an individual who was eligible for the COBRA subsidy but who did not pay the COBRA premium after October 31, 2009, or who paid the premium even though it was not subsidized at the time, must receive a supplemental notice from the plan administrator by February 17, 2010. That supplemental notice must inform the individual about the new legislation and the individual’s right to make retroactive premium payments to maintain COBRA coverage.
If you have questions concerning the new legislation, please contact your benefits consultant.
Debra J. Linder
Direct Dial: 612-492-7163
Email: dlinder@fredlaw.com
John H. Merkle
Direct Dial: (612) 492-7027
Email: jmerkle@fredlaw.com
James B. Platt
Direct Dial: (612) 492-7047
Email: jplatt@fredlaw.com