Last February, with the enactment of the American Recovery and Reinvestment Act of 2009, a federal COBRA subsidy was established providing 65% of COBRA premiums for certain employees and covered family members who lose coverage under a group health plan due to involuntary terminations of employment from September 1, 2008, through December 31, 2009.
Just last week, the Defense Appropriations Act for Fiscal Year 2010 (“DAA 2010”) was passed and signed into law on December 19, 2009, and the act contains a two month extension to the COBRA subsidy premium program. Now, under the act, the COBRA subsidy is extended to apply to involuntary terminations through February 28, 2010. Furthermore, the period for which the subsidy may apply is extended from 9 months to 15 months.
The DAA 2010 requires group health plans to allow assistance eligible individuals who exhausted the 9 month COBRA subsidy period and dropped COBRA coverage to retroactively elect COBRA coverage for up to an additional 6 months and receive the subsidy for that time. Also, for assistance eligible individuals who continued to receive COBRA coverage after their subsidy ends, they can receive a reimbursement payment or credit for the 65% of COBRA premium payments that were paid for up to 6 months following the 9 month COBRA subsidy period.
Notice of the new extension of time and reimbursement right must be provided to assistance eligible individuals eligible for a retroactive COBRA election or rebate, and to all individuals who are assistance eligible individuals at any time on or after October 31, 2009, or who experience a qualifying event consisting of termination of employment on or after October 31, 2009.
The DAA 2010 also clarifies that an individual’s status as an assistance eligible individual is based on the date that the individual experiences a qualifying event. Thus, if an individual was involuntarily terminated but did not lose coverage until the last day of the month, it is intended that such individual may still be an assistance eligible individual and receive the COBRA subsidy although the subsidy expires at the end of such month.
A copy of the DAA 2010 provisions that apply with respect to the COBRA subsidy is available for download as a PDF.
