Employment: COBRA Subsidy Expanded for 2010

01.01.10

COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1986) gives employees and their families the right to continue group health insurance benefits under certain circumstances which would otherwise terminate benefits. These events include voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Employees qualifying for COBRA insurance continuation benefits may be (and usually are) required to pay all of the benefit premiums.

The American Recovery and Reinvestment Act of 2009 authorized a COBRA subsidy for those employees involuntarily terminated during the period September 1, 2008 through December 30, 2009. Qualified employees terminated during this period were required to pay only 35 percent of the insurance premiums for up to 9 months. The remaining 65 percent of the premium was paid by employers, then taken as a credit against employment taxes.

On December 19, President Obama signed legislation that extended the COBRA premium reduction subsidies. The subsidies, which were set to expire on December 30, are now available to qualified employees involuntarily terminated through February 28, 2010. In addition, the subsidy period was extended from 9 months to 15 months.

Plan administrators must provide information about the premium subsidy to all employees who are terminated during the period September 1, 2008 through February 28, 2010, and must give notice of the premium subsidy extension by February 17, 2010 to all those who had received notice prior to the extension. Those employees in a transition period must receive notice within 60 days of the first day of the transition period. A transition period is a period that begins at the end of the original 9 month premium subsidy period if those 9 months ended before December 19, 2009 .

By Rebecca M. Fowler, rfowler@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment
litigation and counsels clients regarding everyday employment matters. 

Oklahoma Employer's Law Blog

 


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