65% COBRA Subsidy Extended Again Through May 31, 2010
Written by: Melissa Marsh, a California Business Law Attorney on 4-15-2010UPDATE 4-15-2010:
65% COBRA subsidy for up to 15 months extended again through May 31, 2010.
In Mid December of 2009, President Obama signed the 2010 Defense Appropriations Bill, which included an extension of the 65% COBRA Subsidy provision originally enacted last February in the American Recovery and Reinvestment Act of 2009 (“Stimulus Bill”). The new law affects the COBRA subsidy as follows:
1. Extends the 65% COBRA subsidy to individuals who were involuntarily terminated and who lost group health insurance coverage before December 31, 2009 to February 28, 2010. So long as the employee is terminated before 2-28-2010 (now May 31, 2010), the employee will be entitled to the 65% COBRA subsidy effectively reducing their COBRA health insurance premium to 35% of the cost of coverage. Employees who receive a notice of termination before February 28, 2010 (Now May 31, 2010), need not actually be eligible for COBRA to receive the 15 month subsidy, they just have to have been involuntarily terminated by that date.
2. Gives individuals whose subsidized COBRA coverage expired, 60 days from the date of enactment (or 30 days after the employer provides written notice of the employee’s eligibility for the extended COBRA subsidy, whichever is later) to retroactively get back their subsidized COBRA coverage. To do so, the former employer who opted to cancel coverage must pay the 35% subsidized premium amount to reinstate the coverage. If the former employer paid the full premium for any period after October 31, 2009, the “overpayment” must be refunded or credited towards future coverage.
3. Requires administrators of group health plans to provide current and former employees entitled to COBRA benefits written notice of the new 15-month COBRA premium subsidy and the foregoing amendments.
4. Extends the maximum subsidy period for an additional 6 months from 9 months to a total of 15 months.
The new legislation also permits employers to either issue refund checks for beneficiaries who “overpaid” their COBRA premiums by paying unsubsidized premiums but who are now eligible for retroactive subsidized coverage, or to offset future COBRA premiums by paying those premiums on behalf of the affected former employees.
Posted in Business Law Bulletin, Corporate Client Bulletin, Employment Law News
Tags: COBRA subsidy
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April 15th, 2010 by mmarsh
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