No New Extension of COBRA Benefits Subsidy

The recent passage of the Emergency Unemployment Compensation Program Extension and Extended Benefits Temporary Provisions Extension did not extend the subsidy of COBRA benefits.   

Congress had previously extended the subsidy for COBRA benefits through May 31, 2010.   The COBRA subsidy provided a 65% health insurance premium subsidy for up to 15 months to qualified employees who were involuntarily terminated from their employment between September 1, 2008 and May 31, 2010.  The subsidy was also available to qualified employees who initially were eligible for COBRA due to a reduction in hours and then, after their hours were reduced, were involuntarily terminated between March 2, 2010 and May 31, 2010. 

Since the COBRA subsidy was not extended, qualified employees who lose their jobs and choose to continue their health insurance under COBRA have to pay up to 102% of their health insurance premium, which may be more than many unemployed workers can afford. 

Employees who qualified for the subsidy because they lost their jobs before May 31, 2010 will continue to receive the subsidy for up to 15 months from the date they were involuntarily terminated.

The U.S. Department of Labor posted the details regarding the COBRA subsidy extension for employees who lost their jobs on or before May 31, 2010 on its website at www.dol.gov/ebsa/COBRA.html.  For details on the Emergency Unemployment Compensation Program Extension and Extended Benefits Temporary Provisions Extension, see the United States Department of Labor Unemployment Insurance Program letter.

This posting is a brief and incomplete summary of a very complex law, and should not be relied upon for any purpose.  Additionally, the law may have changed or may have been clarified by the Department of Labor or the IRS after this posting was written on July 24, 2010.

COBRA SUBSIDY EXTENDED THROUGH MAY 31, 2010

Congress has extended the subsidy for COBRA benefits through May 31, 2010.  The previous extension of the COBRA subsidy had expired on March 31, 2010.  The COBRA subsidy provides a 65% health insurance premium subsidy for up to 15 months to qualified employees who are involuntarily terminated from their employment between September 1, 2008 and May 31, 2010.  The subsidy is also available to qualified employees who initially were eligible for COBRA due to a reduction in hours and then, after their hours were reduced, were involuntarily terminated between March 2, 2010 and May 31, 2010.  Prior to the adoption of the COBRA subsidy, qualified employees who lost their jobs and chose to continue their health insurance under COBRA had to pay up to 102% of their health insurance premium, which was prohibitive for many unemployed workers.  Employees who qualify for the subsidy only need to pay 35% of the premium amount during the subsidy period.

The U.S. Department of Labor has posted the details regarding implementation of the COBRA subsidy extension on its website at www.dol.gov/ebsa/COBRA.html.

This posting is a brief and incomplete summary of a very complex law, and should not be relied upon for any purpose.  Additionally, the law may have changed or may have been clarified by the Department of Labor or the IRS after this posting was written on April 20, 2010.

COBRA Subsidy Extended through March 2010

Breaking news sources reported that the United States Senate passed legislation late in the day on March 2, 2010 to extend the federal partial subsidy of COBRA benefits.  The previous extension of the COBRA subsidy had expired on February 28, 2010.  The bill that includes the most recent extension of the COBRA subsidy had already passed the House of Representatives, and it was promptly signed by President Obama Tuesday night.   However, new legislation will need to be passed soon if the federal government wants to make an ongoing commitment to subsidize COBRA premiums, as the latest extension of the COBRA subsidy expires at the end of March 2010. 

 The U.S. Department of Labor has not yet posted the details regarding implementation of the COBRA subsidy extension.  Updates normally appear on the Department of Labor’s COBRA website.

 This posting is a brief and incomplete summary of a very complex law, and should not be relied upon for any purpose.  Additionally, the law may have changed or may have been clarified by the Department of Labor or the IRS after this posting was written on March 3, 2010.

More on the COBRA Subsidy Extension

The United States Department of Labor Employee Benefits Security Administration (EBSA) is continuing the administrative work necessary to implement the recent extension of the COBRA benefits subsidy.  As you may recall, in late December 2009, the COBRA subsidy was extended to qualified employees who lose their jobs through February 28, 2010 and the time period for receiving the subsidy was extended from nine months to 15 months.  Prior to the adoption of the COBRA subsidy, qualified employees who lost their jobs had to pay up to 102% of their health insurance premium, which was prohibitive for many unemployed workers.  Employees who qualify for the subsidy only need to pay 35% of the premium amount during the subsidy period.

 On February 3, 2010, the EBSA announced that it has posted the COBRA Premium Reduction Fact Sheet in Spanish, the COBRA Model General Notice in Spanish, the COBRA Poster in Spanish, the COBRA Flyer for Employees in Spanish, the COBRA Flyer for Employers in Spanish, and the COBRA Flyer for Employees on Application for Review in Spanish. 

 There has been no word yet on whether the COBRA benefits subsidy will be extended to cover employees who become eligible for COBRA after February 28, 2010.  The proposed federal budget for fiscal 2011 includes an extension of the COBRA subsidy through December 31, 2010, with a proposal that the subsidy last for 12 months.  Also, an extension of the COBRA subsidy is said to be part of a job bill proposed by Senate Democrats.  Keep in mind that an extension could be adopted after February 28, 2010 and made retroactive.  For that reason, it is important to keep post-employment contact information for former employees who may be eligible for COBRA benefits in case there is a need to give them notice of an extension of this program at some point in the future.

 This posting is a brief summary only and is not legal advice and should not be relied on for any purpose.  Please be aware that the law may have changed after this posting was written on February 4, 2010.

COBRA EXTENSION PASSED

The U.S. Employee Benefits Security Administration announced today that the COBRA premium subsidy eligibility period has been extended to cover qualified employees who lose their jobs through February 28, 2010.  The time period for receiving the subsidy has also been extended from nine months to 15 months. 

COBRA is a program that allows employees and their families to continue the health care insurance they received from their employers after their employment ends.  Prior to the adoption of the COBRA subsidy, employees had to pay the full cost of their health insurance, which was prohibitive for many unemployed workers.  Employees who qualify for the subsidy only need to pay 35% of the premium amount during the subsidy period.  COBRA eligibility continues for a period of time after the subsidy ends, but employees will need to pay up to 102% of the costs of their coverage at that point.

Not all employees who are eligible for COBRA are eligible for the COBRA subsidy.  For details, see www.dol.gov/cobra.

This posting is not legal advice, and should not be relied on for any purpose.  It is a summary of a complex area of the law, which may have changed since this posting was written on December 22, 2009.

ARRA COBRA PREMIUM ASSISTANCE ENDING

With the end of 2009 fast approaching, questions have arisen regarding the medical insurance continuation (COBRA) premium assistance under the American Recovery and Reinvestment Act (ARRA).  Under this program, 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.  The COBRA premium assistance under the ARRA applies to qualified employees who involuntarily lose their jobs between September 1, 2008 and December 31, 2009.  However, if the employee loses his or her job in December 2009 but does not become eligible for COBRA until January 2010 (for example, because the employer has paid the premiums for the employee’s health insurance through December 31, 2009), the employee will not be eligible for the premium assistance unless legislation is passed and signed into law extending this benefit.  To check for updates, visit the U.S. Department of Labor’s COBRA website.  The COBRA website also has answers to frequently asked questions and is the source for the information in this posting.

Even though the premium assistance program is scheduled to end on December 31, 2009, qualified individuals who become eligible before year end will be entitled to the full nine months of COBRA premium assistance as long as they continue to meet the eligibility requirements for the program.  For example, if an eligible individual started COBRA on December 1, 2009, he or she would be entitled to COBRA assistance through August 31, 2009 unless his or her circumstances changed (such as by obtaining a new job with health insurance benefits) and he or she was no longer eligible for the premium assistance.

 This posting is a brief summary only and is not legal advice and should not be relied on for any purpose.  Please be aware that the law may have changed after this posting was written on December 12, 2009.