UBP blog

12/10/2009

DOL ‘s new COBRA subsidy guidelines and what they mean for workers laid-off in December 2009

The American Recovery and Reinvestment Act (ARRA) COBRA subsidy President Obama signed back in February will soon come to an end for those who aren’t already qualified.  To clear up any confusion that may arise from this, the Department of Labor (DOL) released two FAQs  to guide employers on determining eligibility.  

The first FAQ states that in order for employees to be eligible for the 65% COBRA subsidy, they must satisfy two conditions:

  1. They must have been involuntarily terminated between September 1, 2008 and December 31, 2009
  2. They must have been eligible to receive COBRA during that period

The second condition is where the confusion lies.

Many employers allow laid-off employees to remain on the company’s health insurance up until the end of the month in which they were terminated. As a result, they don’t become eligible for COBRA coverage until the first day of the month after their termination. 

So, an otherwise Assistance Eligible Individual (AEI) who is laid-off on any day in December 2009 would not be eligible for the 65% COBRA subsidy—that is, if his or her company allows employees to stay on their health plan through the 31st.

The second FAQ states that AEI’s whose COBRA eligibility begins in December 2009 or earlier are eligible to receive the subsidy for up to nine months as long as they remain qualified. So, an employee who’s laid-off in November may be eligible to receive the COBRA subsidy all the way up through August 2010 as long as they’re qualified.

Although bills have been proposed in Congress to lengthen the COBRA subsidy for AEIs, lengthen the time period for COBRA eligibility, and up the amount of the subsidy from 65 to 75 percent; no changes to the COBRA law have been made to date. However, as soon as any new laws are passed, you can count on us to keep you posted.

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