The Fiscal Year 2010 Defense Appropriations Act just signed by President Obama extends eligibility for the 65% COBRA premium subsidy through February 28, 2010, as well as the maximum period during which the subsidy is available from nine to fifteen months. The two month eligibility extension wipes out an interpretation of the law by the U.S. Department of Labor that would have disqualified individuals terminated by December 31, 2009, but who would not lose health coverage until January 1, 2010.

The Department of Labor has explained that individuals who have used up their nine month subsidy and remain eligible will be given additional time to make their payments for the extension period. Eligible individuals who elected to continue paying in full for COBRA coverage after the subsidy expired will be entitled to refunds or credits against future premiums. Employers need to keep an eye out for further guidance on their notice obligations. The Department of Labor website has a COBRA section that is a good place to bookmark for this purpose.