COBRA premium subsidy temporarily extended again

By Lori Basilico, Partner, Edwards Angell Palmer & Dodge LLP

On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (the “TEA”) extending the COBRA premium subsidy eligibility period for an additional month, through March 31, 2010.

This extension permits individuals who are involuntarily terminated between September 1, 2008 through March 31, 2010 to elect COBRA continuation coverage and pay only 35% of the COBRA premium for up to 15 months.

The TEA also makes the following changes: 

  • Reduction in hours followed by an involuntary termination. Individuals who lose group health plan coverage as a result of a reduction in hours on or after September 1, 2008, followed by an involuntary termination of employment between March 2, 2010 and March 31, 2010, will be eligible for the COBRA premium subsidy. The COBRA premium subsidy will only apply to periods of coverage following the involuntary termination and the maximum COBRA period will be measured from the date of the earlier reduction in hours. Employers must notify these individuals, within 60 days of their involuntary termination of employment, of the availability of the COBRA premium subsidy and their election rights. 
  • Employer Determinations. The TEA clarifies that an employer’s determination that the qualifying event for an individual was the employee’s involuntary termination of employment will not be subject to challenge by governmental authorities if the determination is based on a reasonable interpretation of the law and administrative guidance and the employer maintains supporting documentation. 
  • Additional Penalties. If the Secretary of Labor or the Secretary of Health and Human Services determines that an individual is eligible for the COBRA premium subsidy, the TEA permits the “affected individual” or the Secretary to bring a civil action to enforce the determination. In addition, the Secretary may assess a penalty against the plan sponsor or health insurance issuer of up to $110 per day for each failure to comply the Secretary’s determination.

Although this short-term measure extends the COBRA premium subsidy eligibility period through March 31, 2010, Congress is considering a longer extension of the eligibility period, possibly to include involuntary terminations through December 31, 2010.

 

You may like these other stories...

Senate Takes Different Approach from House for Highway and Bridge FundEarlier this week, according to a New York Times article, the Senate agreed to fill the coffers of the fund that pays for highway and bridge repairs with...
There it stands, your client's 100-year-old, rickety, vermin-infested barn or former hotel or whatever the darn thing once was. And she's considering what to do with it. There are two words that can help her decide...
It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.