COBRA Subsidy Extension
On December 18, 2009, the Senate passed a COBRA Subsidy extension as part of the Department of Defense Appropriations Bill. The House had passed the extension earlier this month. The President has expressed his support for the extension and is expected to sign the bill. Updated regulations will be issued by the Department of Labor (DOL) and the Internal Revenue Service (IRS), but the key elements of the extension are as follows:
Eligibility Expansion. Individuals experiencing a qualifying event as a result of an involuntarily termination from employment on or before February 28, 2010 would be eligible for subsidized coverage. This eligibility period would have expired on December 31, 2009. The new extension clarifies that eligibility for the subsidy is based on incurring the involuntary termination prior to February 28, 2010. The COBRA eligibility date can be after this date, unlike the current provision where both the termination and COBRA eligibility date had to be prior to December 31, 2009.
Subsidy Extension. The maximum period of subsidized coverage would be 15 months rather than the current 9 months. The subsidy percentage will remain at 65%.
Required Notices. Group health plans would be required to provide a notification of the subsidy extension within 60 days of enactment to all individuals eligible for the subsidy after October 31, 2009, and to individuals who become eligible for the subsidy after the bill is enacted. Modifications can be made to the exiting ARRA subsidy notice.
Retroactivity. Individuals who lost their coverage as a result of not timely paying premiums after losing existing subsidy eligibility, would be entitled to elect coverage retroactively by paying the premium within 60 days of enactment or, if later, within 30 days of receiving notification of the extension from the group health plan. If someone remained on COBRA by paying the full rate after losing subsidy eligibility, they would be entitled to a refund under the existing refund ARRA rules.
Congress will be taking up other bills which include further extensions and modifications of the subsidy after the new year.
Longfellow Benefits will be hosting a compliance Webinar in January which will include updated information on the COBRA subsidy extension. An invitation will be sent out in early January.
For more information:
http://www.dol.gov/ebsa/cobra.html