Employment: The Employer's Legal Resource - March 2010 - Special Alert

03.02.10

OBAMA SIGNS TEMPORARY EXTENSION ACT OF 2010

In our January 2010 e-newsletter, we discussed that the COBRA subsidy had expanded. Click here to review that article. At that time, the subsidy had been extended to apply to qualified employees involuntarily terminated during the period of September 1, 2008, through February 28, 2010, and extended the period of the subsidy up to 15 months.

After much debate in Congress, the Temporary Extension Act was passed and signed by the President on March 2.

What does this change?

  • COBRA subsidy is now available to qualified employees involuntarily terminated during the period of September 1, 2008, through March 31, 2010
  • The COBRA subsidy continues to be at the same rate. For the applicable period, up to 15 months, the individual will be required to pay only 35% of the cost of COBRA, with the government bearing the remaining 65%.
  • There are new rules applying to a person who previously became eligible for traditional COBRA benefits through the qualifying event of a reduction in hours. If that person is involuntarily terminated after March 2, 2010, this may constitute another opportunity for that person to be eligible for the COBRA subsidy. We are awaiting guidance from the DOL on the practical application of these new provisions.
  • If you are responsible for COBRA notices, you will need to use updated model notices which reflect the changes arising from this new law. If you use a third party provider for your COBRA administration, you might just check in with them to ensure they are following the new protocols.

The Department of Labor is in the process of updating its guidance, fact sheets, and model notices. As of this e-newsletter, the documents were not fully updated. Click here to visit the DOL's main page on COBRA.

By Kristen L. Brightmire, kbrightmire@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment
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