As reported in our April 2010 e-newsletter, the 65% COBRA premium subsidy eligibility period was extended and then re-extended through March 31, 2010. As further reported in our April 2010 e-newsletter, there was much debate as to whether another extension would be signed, but the measure to further extend never made it to a vote. Consequently, employees terminated after March 31, 2010 would remain eligible for COBRA (as applicable) but not the premium subsidy.

Despite Congress’ failure to extend the COBRA premium subsidy prior to March 31, 2010, on April 15, 2010, President Obama signed the Continuation Extension Act of 2010 (H.R.4851), available here. The Act extends the COBRA subsidy premium program through May 31, 2010, including the period from April 1, 2010 through the date of enactment. The Act’s COBRA subsidy provisions are effective as if originally included in The American Recovery and Reinvestment Act of 2009 (“ARRA”), enacted on February 17, 2009. Below is a summary of the key provisions followed by a summary of possible future COBRA subsidy legislation.

• Extended Expiration Date. The COBRA subsidy program will be available for a loss of group health coverage due to involuntary termination (or a reduction of hours that is followed by an involuntary termination) through May 31, 2010.
• Transition Period. For individuals who experienced a termination of employment on or after April 1, 2010, but before April 16, 2010, the Act requires the plan administrator to notify such individuals by June 15, 2010 of their ARRA rights (including the COBRA subsidy) and to allow them to elect COBRA coverage up to 60 days after they are provided with such notification.

The numerous extensions and new notice requirements have made the administration of COBRA continuation coverage requirements a challenge for employers, plans and administrators and additional extensions are likely. The Jobs for Main Street Act (H.R. 2847), passed by the House last December, would extend the COBRA subsidy program through June 30, 2010. In March, the Senate passed the American Workers, State, and Business Relief Act of 2010 (H.R. 4213), which would extend the COBRA subsidy program through December 31, 2010. According to various reports, it is possible that Congress will pass a longer-term extension before the Memorial Day Congressional recess, but the timing and legislative means for such an extension remains uncertain.

The author, Jeffrey C. Rambach, may be reached at jrambach@dsda.com