Just when you think the COBRA subsidy rules were done as of 12/31/09, think again. President Obama signed into law on December 19, 2009 the 2010 Department of Defense Appropriations Act, which has changes to the COBRA subsidy premium rules under the ARRA (American Recovery and Reinvestment Act of 2009).
The signed legislation extends the subsidy program for an additional six months and increases the eligibility period by two months, from December 31, 2009 to February 28, 2010.
Under the previous terms of the ARRA, if a person is an AEI (assistance eligible individual), the employer would pay the 65% of the insurance premium for 9 months, with the federal government reimbursing the employer by allowing a credit on the 941. Now the amount of time has increased an additional 6 months to 15 months.
The legislation also provides for those whose subsidy period has already expired. Under the new legislation, an employee whose subsidy period expired and didn’t pay their portion of the premium (35%) will have the opportunity to retro pay the subsidized portion and elect to remain on COBRA.
Employers need to provide written notice describing the new 15 month subsidy to all individuals who are currently on COBRA on or after 10/31/09, and to those whose employment is terminated on or after 10/31/09 and before 2/28/10.
The subsidy will cease once the AEI is eligible for coverage under another group health plan.