• Cobra Subsidy Extended. . . . Again
  • May 20, 2010 | Author: Kari Knight Stevens
  • Law Firm: Blank Rome LLP - Philadelphia Office
  • On April 15, 2010, the President signed into law the third in a series of extensions to the Federal COBRA subsidy, which was initially enacted as part of the American Recovery and Reinvestment Act of 2009 (“ARRA”). The 15-month, 65%, federal subsidy would have expired on March 31, 2010. As a result of the Continuation Extension Act of 2010 (“CEA”), however, the COBRA subsidy is extended through May 31, 2010 and is retroactively effective to April 1, 2010.

    For individuals who experienced a termination of employment on or after April 1, 2010 but before April 16, 2010, the CEA requires plan administrators to notify such individuals by June 15, 2010 of their ARRA rights (including the COBRA subsidy) and to allow them to elect COBRA coverage up to 60 days following receipt of such notice. As clarified by the prior extension, the COBRA subsidy is available both to individuals who experience an involuntary termination resulting in a loss of group health coverage and to those individuals who experience a loss of group health coverage due to a reduction in hours that is followed by an involuntary termination.

    Comment: Administration of COBRA continuation coverage has become increasingly challenging for employers and plan administrators due to the numerous extensions and notice requirements associated with the COBRA subsidy. To avoid the pitfalls of these challenges, employers and plan administrators should review their COBRA notice and practices to make sure they accurately reflect the most up-to-date COBRA subsidy requirements. Additional extensions to the COBRA subsidy are expected. Legislation is currently pending, which, if passed, could extend the COBRA subsidy through December 31, 2010.