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.
Purchase this on-demand
Government Sources
From the Employee Benefit Security Administration (Department of Labor):
Model Notices:
ARRA, as amended by the Department of Defense Appropriation Act, 2010 (2010 DOD Act), mandates that plans notify certain current and former participants and beneficiaries about the premium reduction.
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 the 2010 DOD Act.
Updated General Notice
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 February 28, 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.
Premium Assistance Extension Notice
Plan administrators must provide notice to certain individuals who have already been provided a COBRA election notice that did not include information regarding ARRA, as amended. This model Premium Assistance Extension Notice includes information about the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act. Listed below are the affected individuals and the associated timing requirements.
Individuals who were "assistance eligible individuals" as of October 31, 2009 (unless they are in a transition period - see below), and individuals who experienced a termination of employment on or after October 31, 2009 and lost health coverage (unless they were already provided a timely, updated General Notice) must be provided notice of the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act by February 17, 2010;
Individuals who are in a "transition period" must be provided this notice within 60 days of the first day of the transition period. An individual's "transition period" is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. An individual is in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and they otherwise remain eligible for the premium reduction.
Note: To some extent, the groups listed above overlap - creating a situation where an individual may be entitled to multiple notices. Providing the Premium Assistance Extension Notice by the earliest date required will satisfy the notice requirement(s).
Updated Alternative Notice Insurance issuers that provide group health insurance coverage must send the updated Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find the model Premium Assistance Extension Notice or the updated model General Notice appropriate for use in certain situations.
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