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.

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.