Employee Benefits-New Wrinkle To COBRA Subsidy

As I reported in my blog of Thursday, March 4, the Temporary Extensions Act of 2010 (the “Act”) extended the eligibility period for the COBRA subsidy for one month. Therefore, an employee who is involuntarily terminated on or prior to March 31, 2010 (as opposed to February 28, 2010) may be eligible for the 15-month, 65% COBRA subsidy.

However, there is a new wrinkle. Prior to the Act, the employee’s COBRA qualifying event had to be an involuntary termination of employment, in order for the employee to be eligible for the COBRA subsidy. Under the Act, an employee may be eligible for the COBRA subsidy if:
–his or her qualifying event is a reduction in work hours, which occurs on or prior to March 31, 2010 (but on or after September 1, 2008); and
–he or she is involuntarily terminated on or after March 2, 2010, and after the reduction in work hours.

To comply with the Act, an individual described above, who did not previously elect to receive COBRA coverage (or who let his or her coverage lapse), must be notified (during the 60-day period starting on the date of the termination) and given the opportunity to make the election. Similarly, an individual described above, who did elect to receive COBRA coverage upon the reduction in work hours, must be notified (during that 60-day period) of his or her eligibility for the COBRA subsidy. I understand that a bill has been introduced in Congress to further extend the COBRA subsidy, so stay tuned.