COBRA Subsidy Extension

From the KS Health and Welfare Team:

It’s coming down to the wire for the COBRA subsidy, but it now appears likely that the COBRA subsidy will be extended as part of the Department of Defense Appropriations Act. Both the House and the Senate need to approve this bill prior to the Holiday recess. If the extension remains in the final bill, the key provisions of the extension are as follows:

Extension of COBRA Subsidies. If enacted, individuals experiencing a qualifying event as a result of an involuntarily termination from employment on or before February 28, 2010 would be eligible for subsidized coverage. This eligibility period would have expired on December 31, 2009 under ARRA. The amendment clarifies that eligibility of the subsidy is based on incurring the qualifying event within this time period. The individual may elect COBRA coverage at a later point (for example, if the employer provides subsidized coverage that delays the COBRA start date). However, this appears to also present a problem, because an employer can extend the qualifying event date by extending active coverage post-termination. Thus, the IRS and DOL would need to clarify that point.

Maximum Coverage Period. The maximum period of subsidized coverage would be 15 months rather than the 9 months provided under ARRA.

More Notifications. Group health plans would be required to provide a notification of the subsidy extension within 60 days of enactment to all individuals eligible for the subsidy after October 31, 2009, and to individuals who become eligible for the subsidy after the bill is enacted. (The notice to future eligible individuals could be incorporated into the existing ARRA notice.)

Retroactive Payments. Individuals who lost their coverage as a result of not timely paying the December (or later) premiums would be entitled to elect coverage retroactively by paying the premium within 60 days of enactment or, if later, within 30 days of receiving notification of the extension from the group health plan. If someone remained on COBRA by paying the full rate in December (and later months), they would be entitled to a refund under the existing refund ARRA rules.

A copy of the current provisions are attached to this email. We will keep you updated as this moves through Congress over the next seven days.



Mark L. Stember
Kilpatrick Stockton LLP
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607 14th Street, NW
Washington, DC 20005
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