The American Recovery and Reinvestment Act (ARRA) provided a COBRA premium subsidy that entitled eligible individuals, who were involuntarily terminated from employment on or before May 31, 2010, to pay only 35% of the required COBRA premium for up to 15 months. After 15 months of subsidized COBRA coverage, the full premium was payable for the remainder of the continuation period. Because 15 months has elapsed since May 31, 2010, all COBRA enrollees (with limited exception) should now be paying the full 100% COBRA premium.
Exception: If an individual was involuntarily terminated before May 31, 2010 and a company did not start the individual’s COBRA coverage until a later date due to the terms of a severance agreement or other similar arrangement, the individual could still be entitled to the subsidized coverage. For example, if an individual was involuntarily terminated on May 31, 2010, but due to the terms of a severance agreement with the employer, his COBRA coverage did not start until November 1, 2010, the individual would still be eligible for 15 months of subsidized COBRA coverage through January 31, 2012, as long as he did not become eligible for another group plan or Medicare.
With the expiration of the COBRA premium subsidy, employers should consider reviewing their COBRA enrollments with their insurance companies or with their COBRA administrators to ensure that the COBRA premiums have been increased to the full 100% COBRA continuation premium. The former employee’s failure to make the correct payments could result in coverage termination. Should you have any questions, please consult your relationship attorney.