Congress Votes to Extend COBRA Subsidy The House and Senate both have passed the Department of Defense Appropriations Act of 2010 (the Act) which includes an extension of the federal COBRA subsidy originally included in the American Recovery and Reinvestment Act (ARRA) and President Obama has signed the bill into law. The Act extends the time period to receive a government subsidy of 65% of the COBRA premium that an eligible person would otherwise be required to pay. The Act does not change most of the provisions included in the original ARRA legislation.

Following are the key modifications to ARRA:

Legislation Highlights

1. The act extends the eligibility period to all Assistance Eligible Individuals (AEI) that experience a qualifying event on or before February 28, 2010.
    

2. The maximum length of the subsidy period increases by an additional six months, to a total of 15 months instead of the current 9 months.
    

3. Individuals that experience an involuntary termination on or before February 28, 2010 are eligible for the subsidy even if the individual’s COBRA eligibility begins after this date, thus correcting an oversight in the original ARRA legislation.
    

4. Individuals are grandparented under the new legislation if their eligibility under the original nine month subsidy expired after October 31, 2009.
    

5. The legislation requires employers to notify current and future COBRA beneficiaries of the changes to the subsidy period. It also enables a re-enrollment opportunity for participants who dropped coverage because their subsidy period had ended after 9 months.
    

6. The legislation allows employers to offset future COBRA premiums or issue refund checks to beneficiaries who overpaid their COBRA premium during the time ARRA ended and the Act was passed.

Logistical and Administrative Items

1. Employers or their COBRA administrator must notify anyone that was an AEI on or after October 31, 2009 of the amendments made to the Act. This notification must be provided within 60 days of the Act being signed into law.
    

2. The Act provides a transition period for AEIs that exhausted their subsidy between October 31, 2009 and the enactment of this Act. Individuals in the transition period may retroactively pay the premium amounts to maintain their coverage. Payments must be made before the later of 60 days of enactment of the law or 30 days after being notified of their right to continue subsidized coverage.
    

3. Employers or their COBRA administrator must notify any individuals that were originally considered ineligible for the subsidy because their COBRA eligibility began after December 31, 2009. Individuals can claim their subsidy by enrolling in COBRA coverage and completing the Request for Treatment as an Assistance Eligible Individual.
    

4. Employers must determine how they will accommodate overpayments from individuals that were eligible for subsidized coverage but paid the full premium amounts. Employers can refund excess premiums or credit the amount towards future COBRA coverage.

ArlenGroup will provide clients with model documents once they become available.