Under the Consolidated Omnibus Budget Reconstruction Act (COBRA), certain group health plan participants who lose their coverage are permitted to continue coverage for a period of time by electing continued coverage and paying the relevant premium themselves. The American Recovery and Reinvestment Act of 2009, as amended, provided a subsidy to certain eligible individuals that allowed them a discount of up to 65% of their COBRA premiums for up to 15 months. The COBRA subsidy expired on February 28. However, Congress enacted a law that provides for a one-month extension of the COBRA subsidy. Earlier this week, President Obama signed into law the Temporary Extension Act of 2010 (the TEA), which extends the COBRA subsidy through March, and clarifies certain features of the COBRA subsidy. Under the most recent extension, employees will generally be eligible for up to 15 months of reduced premiums if they are involuntarily terminated from employment on or before March 31 and they lose health plan coverage as a result of such termination. In addition to extending the COBRA subsidy, the TEA also created special COBRA rights for individuals who are involuntarily terminated after incurring a reduction in hours, a special notice obligation related thereto, as well as new civil enforcement provisions.
Various aspects of the COBRA subsidy have been changed since its original enactment. For more information about the original subsidy, click here. For information about several important changes to the original subsidy, click here. The text of the Temporary Extension Act of 2010 can be found here.