UBP blog

12/22/2009

New defense bill extends COBRA subsidy and subsidy eligibility

Inside the new $626 billion dollar defense bill that Congress just passed (and the President is expected to sign) is a provision extending the American Recovery and Reinvestment Act (ARRA) COBRA subsidy.

For assistance eligible individuals (AEIs), the new legislation will:

  • Extend the eligibility for the 65% COBRA subsidy from December 31, 2009 to February 28, 2010 (making workers whose COBRA eligibility begins on or before 2/28/2010 now eligible for the subsidy)
  • Adds 6 months to the 9 month period during which the federal government would pay the 65% subsidy to Assistance Eligible Individuals’ COBRA premiums

Also, the legislation will give beneficiaries whose subsidy ran out and who did not pay the full COBRA premium, a second chance to opt for coverage. For example, if an AEI’s subsidy eligibility ran out on November 30, 2009 and they did not pay the regular, unsubsidized COBRA premium for December, they could opt to pay their 35% share of the premium in January and get coverage for December.

What employers need to do:

Provided that President Obama signs this bill into law, employers will need to do the following:

  • Notify current and future COBRA beneficiaries of the new 15 month subsidy
  • Notify current and future COBRA beneficiaries of the subsidy’s new deadline of February 28, 2010

 The ARRA Act COBRA subsidy has greatly increased the number of terminated employees who take COBRA.

As employers, you should expect a high percentage of those who elected COBRA under the subsidy plan and have not found employment yet to continue COBRA under this extension. So don’t be guilty of failure to notify them about this benefit.

Advertisements

Blog at WordPress.com.