The 65 percent federal subsidy of COBRA premiums for individuals who have been involuntarily terminated from employment has been extended both in length of the subsidy period and the eligibility period. As originally passed last winter, the subsidy had a maximum period of nine months. It has now been extended to a maximum of 15 months and the eligibility period has been expanded to February 28, 2010. In addition, the new law clarifies that individuals who are laid-off February 28 but do not lose health insurance coverage until March are eligible for the COBRA subsidy.
This extension of the subsidy to 15 months applies to individuals who are currently receiving the COBRA subsidy and to those whose nine-month subsidy period had expired. For example, an individual who had started receiving the COBRA subsidy in March 2009 would have received the subsidy for nine months in November 2009. This extension provides the subsidy for an additional six months to May 2010. If this individual had continued COBRA coverage in December by paying 100 percent of the premium, the employer may either reimburse or credit the individual for the overpayment. If the individual had not continued COBRA coverage, the employer must notify the individual of the subsidy extension by February 17, 2010. The individual then has 30 days from that notice to pay the 35 percent premium back to loss of COBRA coverage.
Employers will need to modify the COBRA notices to reflect the extension of the COBRA subsidy. In addition, separate notices must be sent to individuals currently on COBRA subsidy – or whose coverage ended when their subsidy expired – to inform them of the extension to a total of 15 months. The Department of Labor is expected to post model notices on their website in mid-January.
Although the COBRA subsidy period is extended to 15 months total, there is no extension of the basic 18-month COBRA period. Also unchanged is the right of the individual to appeal the employer’s denial of “assistance eligible individual” status to the Department of Labor. This subsidy extension applies only to the federal COBRA program and not to the state “mini-COBRA” that is applicable to employers with 19 or fewer employees. At the time of this writing, the Minnesota Department of Human Services has not yet determined if the extension is applicable to the Minnesota COBRA program.