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COBRA SUBSIDY EXTENSION SIGNED INTO LAW
December 27, 2009
The U.S. Senate passed the Fiscal Year 2010 Department of Defense (DOD) Appropriations Act by a vote of 88-10. This spending bill included an important provision regarding the extension of the current COBRA Subsidy Program that was enacted under the American Recovery and Reinvestment Act (ARRA) in February of this year.
The new act extends the eligibility date for subsidy from December 31, 2009 to February 28, 2010 and extends the length of time an individual may receive subsidized premiums from 9 months to 15 months.
What this means is that any employee that loses their eligibility for group benefits under a group health plan due to Involuntary Termination through 2/28/2010, will be eligible for subsidized premium for a total of 15 months. Further, any individuals who are currently receiving COBRA benefits with subsidized premium will be eligible to continue such subsidy for an additional 6 months (for a total of 15 months).
Individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have an additional 60 days to pay the reduced premiums related to the extension. To continue their coverage they must pay the 35% of premium costs by February 19th, 2010 or, if later, 30 days after notice of the extension is provided by the plan administrator.
Model notices are currently being generated by the Department of Labor and should be available within the next 30 days. For those employers that are utilizing a Third Party Administrator for COBRA Administration, the vendors should be producing letters to send to all current active Cobra participants advising of this change.
We will continue to keep you apprised of any additional developments. For questions, please contact Sherrie Zenter, Vice President of the Employee Benefits Department at 818-933-2739 or email szenter@mmibi.com.