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COBRA PREMIUM SUBSIDY EXTENDED
On December 19, 2009, President Obama signed into law
the Department of Defense Appropriations Act of 2010 which also
amends the American Recovery and Reinvestment Act of 2009
(ARRA). The Act extends ARRA's COBRA premium subsidy
eligibility period and the duration of assistance of the subsidy and
imposes new notice requirements on plan administrators.
Eligibility Period Extended to February 28, 2010
Under current law, an assistance eligible individual who
was involuntarily terminated from employment after December 31, 2009,
was not eligible for the federal COBRA premium subsidy. The Act
extends the eligibility period to include individuals involuntarily
terminated during the period that begins with September 1, 2008 and
ends on February 28, 2010, as long as the individual is entitled to
COBRA coverage as a result of an involuntary termination.
Maximum Coverage Period Increased from Nine Months
to Fifteen Months
The Act also increases from nine months to fifteen
months the amount of time an assistance eligible individual can
receive the premium subsidy. As before, the COBRA premium
assistance will end following the date an eligible individual becomes
eligible for: (1) coverage under any other group health plan
(other than one consisting only of dental, vision, counseling or
referral services), (2) coverage under a health flexible spending
account plan, (3) coverage of treatment at certain employer on-site
facilities, or (4) coverage under Medicare or Medicaid.
COBRA Coverage Maintained During Transition Period
An assistance eligible individual will be treated as
having timely paid the premium, if: (a) the individual was covered
under the COBRA continuation subsidy to which the premium relates for
the period immediately preceding the "transition period"
(any period of coverage before the extension's enactment date); and
(b) the individual pays the subsidized premium not later than 60 days
after the enactment of the extension date, or if later, 30 days after
the new notices are provided.
Refunds for Retroactive Premium Assistance
Eligibility
In the case of any assistance eligible individual
entitled to the additional subsidy who paid the full premium prior to
the extension's enactment, the Act provides for reimbursement of the
excess premium.
Plan administrators must provide assistance eligible
individuals with notice of the new extension rights. The notice
must be provided to individuals who were or become assistance
eligible any time on or after October 31, 2009 and to assistance
eligible individuals who experience an involuntary termination on or
after that date. The notice must be provided by February 17,
2010, or in the case of an involuntary termination occurring after
the date of enactment, the notice must be provided consistent with
the timing of other COBRA notices.
Within 60 days of an individual's transition period,
plan administrators must also provide assistance eligible individuals
who did not timely pay the premium or who paid the full premium
amount without regard to the subsidy, with additional notice of the
extensions granted in the Act and the ability to make retroactive
premium payments in order to maintain COBRA continuation
coverage.
If you have
any questions, please contact:
Ed Hammond at
248.988.1821 or ehammond@clarkhill.com
or
Tracy Leahy at 313.965.8533 or tleahy@clarkhill.com.
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