President Obama recently signed into law an extension of the government subsidized COBRA premium reduction program established earlier this year by the American Recovery and Reinvestment Act of 2009 (“ARRA”). Originally the promise of a subsidy for COBRA premiums for involuntarily terminated employees was due to expire on December 31, 2009.

The new law:

  • Extends the subsidy period from up to 9 to up to 15 months (including retroactively);
  • Covers qualifying involuntary terminations through February 28, 2010 (extended from December 31, 2009);
  • Requires only that the involuntary termination, and not the eligibility for COBRA, occur before the extended deadline date (February 28, 2010); and
  • Requires new COBRA notices to be developed and sent to certain assistance eligible individuals.

Please also note that further modifications to the COBRA premium reduction program may be coming down the legislative pipeline in 2010. The Jobs for Main Street Act, which was approved by the House on December 16, 2009 and is expected to be considered by the Senate in early January, contains additional provisions extending the COBRA premium reduction program, as well as additional notice and enforcement requirements. We will continue to track this legislation and keep you informed of additional developments as they occur.