Thursday, February 25, 2010

Interim COBRA subsidy extension expected

A stopgap measure is expected to be introduced late this week by Senate Majority Leader Harry Reid (D-Nev.) to extend the COBRA subsidy to employees involuntarily terminated from March 1 through either March 15 or March 31. The purpose of this short extension is to give lawmakers time to construct a broader bill that would extend the 65% premium subsidy by as much as a year.

While an extension of the subsidy through May 31 was part of the Senate Finance Committee’s bipartisan jobs bill, the provision was removed in an effort to focus the bill on job creation. Reid is expected to propose a multi-month COBRA subsidy extension in coming weeks as part of additional jobs-related legislation.

The current COBRA extension in the Department of Defense Appropriations Act, 2010 (2010 DOD Act) is set to expire at the end of this month. The Act expanded upon the American Recovery and Reinvestment Act of 2009 (ARRA) by extending the COBRA subsidy to those who lost group coverage due to involuntary termination through February 28, 2010, rather than December 31, 2009.

This legislation also included provisions to:
• Extend the period of the COBRA subsidy from 9 to 15 months;
• Mandate that group health plans provide a notice within 60 days describing the 15-month premium subsidy to all subsidy-eligible individuals on COBRA or eligible for COBRA on or after October 31, 2009; and
• Require group health plans to allow a period for retroactive premium payments from individuals whose subsidy expired on November 30, 2009 and failed to make the December COBRA premium payment.

In North Carolina, the current subsidy extension also applies to State Continuation members.

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