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Employment Law Blog

Friday, April 16, 2010

COBRA Subsidy Eligibility Extended To May 31, 2010

On April 15, 2010, President Obama signed H.R. 4851 into law. Among other matters, the new law amends the American Recovery and Reinvestment Act of 2009 (“ARRA”) to extend through May 31, 2010, premium assistance for COBRA benefits (health insurance continuation benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985).

The COBRA subsidy was originally provided as part of the ARRA in 2009. Generally, the subsidy pays for 65% of the former employee’s health insurance premium under COBRA (the employee pays the remaining 35%). Employers or the group health plan provider pay the 65% and can then apply for a tax credit.

Congress has extended the subsidy eligibility period several times. Earlier this year, the 2010 DOD Act extended the COBRA premium reduction eligibility period for two months until February 28, 2010. Additionally, the legislation increased the maximum period for receiving the subsidy for an additional six months (from nine to 15 months). A subsequent amendment extended the coverage period to March 2010, and yesterday’s legislation extends it to the end of May.

Therefore, employees who are involuntarily terminated on or before May 31, 2010 may be eligible for the subsidy.

The text of the legislation can be found here.

<u>Related Articles:</u>

Congress Extends COBRA Subsidy

COBRA Obligations Expanded

Submitted by:
Christopher W. Olmsted, Esq.
Barker Olmsted & Barnier, APLC

Posted by Christopher W. Olmsted on 04/16 at 03:38 PM
COBRAEmployee BenefitsEmployment Law