COBRA Subsidy Extension Announced


Yesterday, President Obama signed into law H.R. 3324, the Defense Appropriations Act that included a provision to extend federal COBRA premium subsidies.  Currently, it applied to those that involuntarily lost their coverage and were eligible for COBRA to 12/31/09.  The extension makes that timeframe 02/28/10.  It also extend the time period for which a subsidy can be given from 9 months to 15 months. In addition, the legislation would give beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out November 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35 percent share in January and receive COBRA coverage for December.  The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35 percent share in December.

 There are additional notification requirements for those who formerly, currently, or prospectively elect COBRA continuation.  The Department of Labor has not published a model notice yet. 

COBRA subsidy expansion from HR 3324

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