Employee Benefits-COBRA Subsidy Extended Again!

Congress has passed, and the President has signed, the Continuing Extension Act of 2010 (the “2010 Extension Act”). This new Act once again extends the COBRA subsidy to individuals having an involuntary termination of employment on or before May 31, 2009. According to the Department of Labor’s website (which has a link to the 2010 Extension Act), the subsidy is now available as follows:

The American Recovery and Reinvestment Act of 2009 (the “ARRA”), as amended by various acts including the 2010 Extension Act, provides for premium reductions, i.e., a subsidy, for health benefits under COBRA. Due to the subsidy, eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify for the subsidy, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee’s employment. The involuntary termination must generally occur during the period that began September 1, 2008 and ends on May 31, 2010. (An involuntary termination of employment that occurs on or after March 2, 2010 but by May 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through May 31, 2010 is also a qualifying event for purposes of ARRA.) The subsidy applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.