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COBRA extension passes — with a few changes

Kerry Fitzgerald
by Kerry Fitzgerald
December 23, 2009
1 minute read
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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.

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