The COBRA Subsidy Extended

Barran Liebman LLP
Oregon Law Firm,

On Saturday morning, the Senate enacted an extension to the COBRA subsidy. As part of the Department of Defense Appropriations Act, the extension is certain to be signed into law by President Obama, triggering additional assistance for involuntarily terminated employees and notice obligations for employers.

Extension of Eligibility
This new legislation extends eligibility for COBRA assistance to those individuals involuntarily terminated on or before February 28, 2010. (The original subsidy only covers individuals terminated on or before December 31, 2009.) Individuals terminated on or before February 28, 2010, but not beginning COBRA until March 1, 2010, are explicitly covered under the extension.

Extension of Assistance
The period an individual may receive payments under the subsidy has been extended from 9 months to 15 months. This extension applies to terminated individuals currently receiving subsidy payments as well as newly terminated individuals. In addition, individuals who already lost assistance because their eligibility expired will be reimbursed and have the option to re-enroll for up to 15 months of total assistance.

Employer Action

Employers have 60 days from the bill’s enactment (the date signed by the President) to send notices to all impacted individuals regarding the extended period. Depending on when the President signs the bill, this date is anticipated to be in late February 2010. In distributing these communications, employers should be sure to include all individuals terminated in December 2009 who, under recent Department of Labor guidance, were advised that they would not be eligible for the subsidy. Under the extension, these individuals are now eligible for 15 months of coverage.

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