COBRA extension passes — with a few changes
December 23, 2009 by Kerry IsbergPosted in: COBRA, Employment law, Health care, In this week's e-newsletter, Latest News & Views, Terminations
Don’t ditch the paperwork for the federally mandated COBRA subsidy program just yet. The subsidy’s just been extended, and it has a new wrinkle.
The extension, passed by both houses of Congress as an add-on to the Department of Defense Appropriations Act of 2010, was signed by President Obama Dec. 21.
The initial subsidy, part of the Obama administration’s American Recovery and Reinvestment Act, called for a 65% subsidy on the premiums terminated employees must pay to continue their health coverage under COBRA. It was set to expire Dec. 31.
As you remember, employers were required to cover subsidy payments, which could then be reimbursed through reductions in federal payroll taxes.
New deadline: Feb. 28
The new law, which goes into effect immediately, extends employee eligibility for the subsidy to Feb. 28, 2010. It also extends the subsidy period from the current nine months to 15 months.
The legislation gives employees whose nine-month subsidy has run out another six months of premium assistance.
Final wrinkle: Employees whose subsidy period ran out Nov. 30 — and who couldn’t come up with the full insurance premium for December — can pony up the 35% and get retroactive coverage for the final month of the year. They’d then be able to receive the subsidy for another five months.
The bill also includes an amendment providing an additional 13 to 20 weeks of unemployment benefits, increasing payments by about $25/week.
That’s not the end of the story for the COBRA subsidy program, though – there’s another bill waiting in the wings. The Jobs for Main Street Act of 2010 (HR 2847), passed by the House last week, would also extend the eligibility deadline for COBRA premium subsidy payments for six months, to 6/30/10. However, this bill likely faces revisions in the Senate. We’ll keep you posted.
Tags: COBRA, Department of Defense Appropriations Act, obama
December 24th, 2009 at 1:49 am
THE ORIGINAL 65% SUBSIDY WAS FOR A 9-MONTH PERIOD BEGINNING MARCH 1 AND ENDING DECEMBER 1. SINCE THE 6-MONTH SUBSIDY EXTENSION WASN’T SIGNED UNTIL DECEMBER 21, MY PAYMENT FOR DECEMBER (MAILED IN LATE NOVEMBER) WAS FOR THE FULL PREMIUM AMOUNT; THUS, AM I NOW ENTITLED TO A REFUND OF THE DIFFERENCE, OR IS THE FULL AMOUNT REQUIRED FOR DECEMBER ONLY?
PLEASE SEND RESPONSE TO E-MAIL ADDRESS LISTED ABOVE, IT WOULD BE GREATLY APPRECIATED. THANK YOU.
December 24th, 2009 at 3:56 pm
Assuming your COBRA is still available in December and that you qualified for the ARRA subsidy beginning 3/1/2009, your December premium has now been reduced to 35% of the full COBRA premium. Your payment in November (for December) of 100% of the COBRA premium has now created a credit of 65% of the full COBRA Premium.
This credit will be used to pay all or part of future premiums. If any credit exists when your COBRA ends it will be refunded to you.
December 25th, 2009 at 7:01 pm
The COBRA coverage for me ends 1.10.09 for me and the renewal period ended 12.27.09, however I couldn’t afford the renewal premium – what are my options?
Please respond to me at the address above.
Thanks,
Denise
December 27th, 2009 at 2:24 pm
Marc,
I am in the same boat as you, as I also paid a full premium amount for December, after my 9 months subsidy ended. I am waiting to hear back from my COBRA administrator. I’ll let you know what I find out.
MJ
December 28th, 2009 at 10:08 am
Re-read the wrinkle! It only applied to those who could not come up with the full premium. You obviously could. And if you can, why am I paying your insurance when I’m having a hard time covering my own family?
December 28th, 2009 at 10:49 am
Does anyone know if Michigan has anyplans to enact a mini Cobra law
December 28th, 2009 at 11:14 am
“…extends employee eligibility for the subsidy to Feb. 28, 2009″
DON’T YOU MEAN TO FEB. 28, 2010??
December 28th, 2009 at 11:23 am
CindyD responded:
“Re-read the wrinkle! It only applied to those who could not come up with the full premium. You obviously could. And if you can, why am I paying your insurance when I’m having a hard time covering my own family?”
Perhaps Cindy you should re-read the wrinkle where it says:
Final wrinkle: Employees whose subsidy period ran out Nov. 30 — and who couldn’t come up with the full insurance premium for December — can pony up the 35% and get retroactive coverage for the final month of the year. They’d then be able to receive the subsidy for another five months.
It is not referring to only those who cannot pay the full amount it is referring to anyone who had their COBRA terminated because they could not come up with the full premium amount. The statement is saying that anyone who is still eligible for COBRA in December and could not come up witht the full premium amount does not need to terminate their COBRA coverage and can pay the 35% premium and be re-instated. It is also saying that anyone who paid the full amount can be reimbursed their 65% of the premium paid.
Also, you (Cindy) are not paying for other COBRA premiums. It is the businesses that are picking up the 65% of the premium and if you knew anything about Benefits or Human Resources you would know that. What the company you work for does about that is a different story and you should take that up with your company.
December 28th, 2009 at 11:57 am
Does this also change the Extension of Coverage for small employers?
December 28th, 2009 at 1:00 pm
CindyD-
Wow, what a pleasant person you are…
December 28th, 2009 at 1:04 pm
Larry,
Thank you for the clarity on the COBRA.
December 28th, 2009 at 1:11 pm
Larry you are incorrect. We (the taxpayers) ARE footing the bill, not the companies whose employees were laid off.
The subsidy offsets the Federal Payroll Tax Liability of the company whose workers were laid off. The company itself has no responsibility to foot the bill, only to extend the coverage and collect the 35% of premium being paid.
December 28th, 2009 at 1:58 pm
Larry,
I believe you missed one of the other wrinkles in the article, which makes it clear that Cindy (and you and I) are in fact paying for this insurance.
It is true that employers initially pay for the COBRA payments, but they then get reimbursed by the feds by being able to withhold the amount the employer paid from their federal tax payments.
You are all welcome for final clarity on this matter.
Wooly
December 28th, 2009 at 2:01 pm
And Larry, it appears clear that you don’t work in the HR or Benefits business, or you would have known that.
December 28th, 2009 at 4:22 pm
You should all re-read the wrinkle, or better yet, read the regs. They say nothing about “cannot come up with….” They state simply if an assistance eligible person DOES NOT PAY immediately after their subsidy is up, then that person has a grace period to make good on the nonpayment. So, anyone who doesn’t pay, including the deadbeat chronically late payers, have the grace period too. There is no means test here.
January 5th, 2010 at 9:39 pm
Wow!! Stop the maddness. Can’t we all just get along:)
January 10th, 2010 at 6:59 am
THAT’S WHY I WAITED TIL DEC 30 TO MAIL MY PAYMENT IN AT THE 35%. LONG AS IT’S POSTMARKED BY END OF MONTH IT’S GOOD. AND WE all PAY TAXES SO WE’RE CARRYING EACH OTHER….AND WERE ALL IN THE SAME LEAKY BOAT….SO WHY PICK ON EACH OTHER. I MYSELF WOULD LOVE TO STILL BE WORKING AND earn MY INSURANCE. BUT HAVING MEDICAL PROBLEMS THAT COST MY EMPLOYER (DIDN’T HAVE ANY ABSENCES) IS WHAT COST ME MY JOB.