ON APRIL 15, 2010, President Obama signed into law an extension of unemployment benefits and premium assistance available under the American Recovery and Reinvestment Act (“ARRA”) for benefits received under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). This extension provided a COBRA premium subsidy for eligible individuals who were involuntarily terminated from employment through May 31, 2010, as well as retroactive eligibility for individuals who lost their jobs after the prior COBRA subsidy extension expired on March 31, 2010. See our client newsletters and alerts on the COBRA subsidy at http://www.srz.com/news/list.aspx?KeywordPhrase=COBRA.

However, as Assistant Secretary of Labor Phyllis C. Borzi announced on July 6, 2010, in a statement regarding the subsidy, due to the statutory sunset contained in the legislation, individuals who are involuntarily terminated from employment after May 31, 2010, are not eligible for the COBRA premium reduction under ARRA. To date, Congress has not passed a further extension and, at the time of publication, individuals losing their jobs after May 31, 2010, remain ineligible for premium assistance. However, legislation introduced in the Senate at the end of June, if passed, could retroactively provide premium assistance for individuals terminated from employment through November 30, 2010.  

It is important to note that individuals who qualified on or before May 31, 2010, can still receive premium assistance for up to 15 months from the date they elected COBRA coverage, as long as they are not eligible for health insurance under another group health plan or Medicare. It is also important to note that employers can return to using their pre-ARRA COBRA notices until and unless another extension is enacted, or can use the DOL-provided post- ARRA notice (available at www.dol.gov/ebsa/modelgeneralnotice.doc) for participants who experience a qualifying event after May 31, 2010.