On March 2, 2010, the Temporary Extension Act of 2010 (the “Act”) was signed into law. The Act extends the COBRA subsidy eligibility period end date from February 28, 2010 to March 31, 2010 and expands the eligibility to individuals who experience a qualifying event that is a reduction of hours occurring anytime between September 1, 2008 through March 31, 2010 which is followed by an involuntary termination of employment on or after March 2, 2010 through March 31, 2010.

As a result of the Act’s new provisions, an assistance eligible individual is an employee or a member of his/her family who timely elects COBRA coverage following a qualifying event related to an involuntary termination of employment that occurs at any point between (1) September 1, 2008 through March 31, 2010 or (2) March 2, 2010 through March 31, 2010 if (a) the involuntary termination follows a qualifying event that was a reduction in hours and (b) the reduction in hours occurred at anytime from September 1, 2008 through March 31, 2010.

The Act mandates that plans notify certain current and former participants and beneficiaries about the premium reduction. The DOL is updating its existing model notices and creating several additional notices to assist plan sponsors in complying with the new requirements. The new notices will be available shortly at www.dol.gov/cobra. Although the Act extended the COBRA subsidy provision through March 31, 2010, because there are several bills now pending, it is generally expected that the COBRA subsidy will eventually be extended through December 31, 2010.