COBRA Subsidy

COBRA Subsidy Extended

On March 2, 2010, President Obama signed HR4691, The Temporary Extension Act of 2010. The Act extends the eligibility period for the COBRA premium subsidy until March 31, 2010.


On December 19, President Obama signed an extension of the COBRA premium subsidy as part of the Department of Defense Appropriations Act of 2010. The act extends eligibility for the COBRA premium reduction for an additional two months (through February 28, 2010), and the maximum period for receiving the subsidy for an additional six months (from nine to 15 months).

The American Recovery and Reinvestment Act of 2009 (ARRA) originally included provisions under which assistance-eligible individuals (AEIs) who involuntarily lost their jobs could receive a 65% subsidy for continuation coverage premiums for up to nine months. The act was set to expire on December 31, 2009. Under the extension, the subsidy is extended from nine months to 15 months, and AEIs can now receive the subsidy if their involuntary termination triggers COBRA by February 28, 2010.

COBRA Webcast

Webcast Recording—COBRA Premium Subsidy Extended: What Needs Immediate Attention

The Department of Defense Appropriations Act for 2010 extends the COBRA premium subsidies that were enacted last year in the American Recovery and Reinvestment Act. The new law is retroactive (as if included in the ARRA) and will require immediate attention from plan sponsors and their COBRA administrators.

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Government Sources

From the Employee Benefit Security Administration (Department of Labor):

The Department created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA's notice provisions, including those added by TEA.

Model Updated General Notice (New)
Plans subject to the Federal COBRA provisions must provide the updated General Notice to all qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time from September 1, 2008 through March 31, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice. This model notice includes updated information on the premium reduction as well as information required in a COBRA election notice.

Note: Individuals who experienced a qualifying event (that was a termination of employment) on or after March 1, 2010 may not have been provided proper notice. These individuals should get the updated General Notice AND the full 60 days from the date the updated notice is provided to make a COBRA election.

Model Notice of New Election Period (New)
Plans that are subject to continuation coverage provisions under Federal or State law MUST provide, before the end of the required time period for providing a COBRA election notice, the Notice of Extended Election Period to all individuals who:

    -experienced a qualifying event that was a termination of employment at some time on or after March 1, 2010;

    -were provided notice that did not inform them of their rights under ARRA, as amended by TEA; and

    -either chose not to elect COBRA continuation coverage at that time OR elected COBRA but subsequently discontinued that coverage.

Model Supplemental Information Notice (New)
Plans that are subject to continuation coverage provisions under Federal or State law should provide the Supplemental Information Notice to all individuals who elected and maintained continuation coverage based on the following qualifying events:

    -terminations of employment that occurred at some time on or after March 1, 2010 for which notice of the availability of the premium reduction available under ARRA was not given; or

    -reductions of hours that occurred during the period from September 1, 2008 through March 31, 2010 which were followed by a termination of the employee's employment that occurred on or after March 2, 2010 and by March 31, 2010.

Individuals who experience an involuntary termination of employment after experiencing a qualifying event that consists of a reduction of hours MUST be provided this notice within 60 days of that termination. Individuals with qualifying events that occurred on or after March 1, 2010 for which notice of the availability of the premium reduction available under ARRA was not given MUST be provided this notice before the end of the required time period for providing a COBRA election notice.

Model Notice of Extended Election Period (New)
Plans that are subject to continuation coverage provisions under Federal or State law MUST provide, before the end of the required time period for providing a COBRA election notice, the Notice of Extended Election Period to all individuals who:
    -experienced a qualifying event that was a termination of employment at some time on or after March 1, 2010;
    -were provided notice that did not inform them of their rights under ARRA, as amended by TEA; and
    -either chose not to elect COBRA continuation coverage at that time OR elected COBRA but subsequently discontinued that coverage.

Model Supplemental Information Notice (New)

Plans that are subject to continuation coverage provisions under Federal or State law should provide the Supplemental Information Notice to all individuals who elected and maintained continuation coverage based on the following qualifying events:

    -terminations of employment that occurred at some time on or after March 1, 2010 for which notice of the availability of the premium reduction available under ARRA was not given; or
    -reductions of hours that occurred during the period from September 1, 2008 through March 31, 2010 which were followed by a termination of the employee's employment that occurred on or after March 2, 2010 and by March 31, 2010.

Individuals who experience an involuntary termination of employment after experiencing a qualifying event that consists of a reduction of hours MUST be provided this notice within 60 days of that termination. Individuals with qualifying events that occurred on or after March 1, 2010 for which notice of the availability of the premium reduction available under ARRA was not given MUST be provided this notice before the end of the required time period for providing a COBRA election notice.

Model Updated Alternative Notice (New)
Insurance issuers that offer group health insurance coverage that is subject to comparable continuation coverage requirements imposed by State law must provide the Alternative Notice to ALL qualified beneficiaries, not just covered employees, who have experienced a qualifying event through March 31, 2010. However, because continuation coverage requirements vary among States it should be further modified to reflect the requirements of the applicable State law. Issuers of group health insurance coverage subject to this notice requirement should feel free to use the model Alternative Notice, the model Notice of New Election Period, the model Supplemental Information Notice, the model Notice of Extended Election Period, or the model General Notice (as appropriate).



FAQs On The COBRA Premium Reduction Extension Provisions (1/11/10)

Fact Sheet: COBRA Premium Reduction (Updated 3/12/10)

Application For Review Of Denial Of COBRA Premium Reduction

FAQs For Employees About COBRA Premium Reduction Extension

FAQs (General) For Employees About COBRA Continuation Health Coverage 

COBRA Continuation Coverage Assistance under the American Recovery and Reinvestment Act of 2009 (General Web page)

Flyers for Employers and Employees
Flyer for Employees on the Application for Review 
FAQs for Consumers
Job Loss Posters - Small and Large versions

From the Internal Revenue Service

COBRA Health Insurance Continuation Premium Subsidy (General Web page)

COBRA Questions and Answers for Employees and Former Employees, 9/2/09

Reminder: COBRA Subsidy Recipients Who Later Become Eligible for Insurance Coverage Should Notify Their Former Employer to Avoid a Penalty, 8/25/09

IRS Notice 2009-27  is guidance provided under section 3001 of the American Recovery and Reinvestment Act of 2009 relating to the premium reduction for individuals who were involuntarily terminated and are electing COBRA continuation coverage under the group health plan of their former employer.  
Notice 2009-27 will appear in IRB 2009-16 dated April 20, 2009.

COBRA Answers for Employers 

From the Centers for Medicare & Medicaid Services (CMS)

COBRA Continuation of Coverage

COBRA Section of the Department of Defense Appropriations Act, 2010 (HR3326):

COBRA Section of the Bill

Text of ARRA:

COBRA Section of the Act 

Joint Explanatory Statement of the Committee of Conference on the COBRA Premium Reduction Provision 

Full Text of ARRA:

HR 1  
Conference Report

Additional Resources:

Congress Extends and Expands COBRA Premium Subsidy Program: Employers Must Review Participant Roles for Participants Eligible for COBRA Based Upon Reduction in Hours,  Michael Best & Friedrich (New)

ARRA Subsidy Extended- McGraw Wentworth (New)

One Month Extension to COBRA Subsidy Signed into Law on March 2, 2010, Groom Law Group (New)

Presidient Signs Into Law Temporary Extension of COBRA Premium Subsidy, Hewitt (New)

COBRA Subsidy Extended an Broadened into 2010, McGuire Woods

COBRA Subsidy Period and Election Opportunities Extended, Michael Best & Friedrich

COBRA Subsidy Extension: A Gift for the Holidays, Holland & Hart

Statement of Phyllis C. Borzi on COBRA Subsidy Extension, Employee Benefit Security Administration

Congress Approves COBRA Premium Subsidy Extension, Business Insurance

As the Expiration Date for the Temporary COBRA Subsidy Approaches, DOL Clarifies Eligibility, Segal

U.S. Unemployed Face Higher Healthcare Premiums, Reuters

Health and Welfare: Year End Update Regarding COBRA Subsidy, Miller Chevalier

Ceridian Analyzes COBRA Enrollments in Light of a Premium Subsidy in ARRA, Ceridian

Hewitt Analysis Shows Average COBRA Enrollments Doubled Since Subsidy Became Available in February 2009, Hewitt

IRS Issues Guidance on Involuntary Termination for COBRA Premium Subsidy, Faegre Benson

Employee Benefits Alert: IRS Issues New Guidance on COBRA Subsidy, Mintz Levin

IRS and DOL Issue New COBRA Premium Reduction Guidance, Seyfarth Shaw

U.S. Department of Labor Issues Model COBRA Subsidy Notices and Other Guidance, Proskauer Rose

U.S. Department of Labor Issues Model Notices for New COBRA Rules, Buchanan Ingersoll  & Rooney

Model COBRA Subsidy Notices Released, Aon

Stimulus Bill Ushers in Sweeping COBRA Requirements- Nixon Peabody

The COBRA Premium Subsidy Law: Understanding Your Compliance Obligations - McDermott, Will & Emery

COBRA Subsidy Provisions Included in the Stimulus Act: What Plan Sponsors and Administrators Need to Do NOW - Alston & Bird

Stimulus Plan Requires Immediate COBRA Action - Morgan Lewis

COBRA Provisions in American Recovery and Reinvestment Act - Groom Law Group

Congress Establishes Premium Subsidy for COBRA Beneficiaries - Aon Consulting

Immediate Action Needed to Implement Stimulus Act Changes to COBRA Coverage - Butzel Long

Important News for Employers and Other Health Plan Sponsors - Proskauer Rose

Subsidized COBRA Coverage Soon To Be Enacted - Watson Wyatt

Stimulus Package Includes 65% COBRA Premium Subsidy - Spencer Fane