Legal Issues Impacting Your Business
Over the weekend the Senate passed the COBRA subsidy extension. The bill now moves to the President for signature. Although the bill will not be effective until signed by President Obama, we have received numerous inquiries as to the bill's provisions and therefore are providing you with the following summary in advance of the bill's signing.
The final bill extends the maximum length of the subsidy from 9 to 15 months and extends eligibility for the subsidy to individuals who are involuntarily terminated on or before February 28, 2010, regardless of when they ultimately lose health insurance coverage. This means that individuals who are involuntarily terminated in February 2010 but who do not lose their health insurance coverage until March 1 or after, will still qualify for the subsidy. This is a significant change from ARRA's provisions which required that both the involuntary termination and loss of health coverage occur within the eligibility period.
Individuals who exhausted their 9 month subsidy in November and have paid the full amount of the COBRA premium in December must have the excess amount credited to their future COBRA premiums or receive a refund of the overpayment. The same is true for any overpayments made in subsequent months. Additionally, individuals whose 9 month subsidy expired in November and who did not pay the full premium in December now have 60 days from the date of the bill's enactment, or 30 days from the date they receive notice from their plan administrator, whichever is later, to pay the subsidized premiums. Plan administrators are required to notify individuals of these provisions.
Finally, the bill also requires plan administrators to notify individuals who were assistance eligible individuals at any time on or after October 31, 2009 or who experience a termination of employment on or after October 31, 2009 of these amendments. The notice must be provided within 60 days of the date of the bill's enactment for individuals whose termination of employment occurred prior to enactment or within the time frame for providing COBRA election notices for individuals whose termination of employment occurs on or after the date of enactment. We anticipate that in response to these new requirements the Department of Labor will be updating its sample notices and will notify you when these are available.
It should also be noted that as part of an appropriations package, the House has passed a provision extending the COBRA subsidy through June 30, 2010. The Senate is expected to act on this legislation next year which means we could see further changes to the COBRA subsidy provisions in 2010.
If you have any questions regarding the COBRA subsidy extension or its implementation, please do not hesitate to contact Susan Freed at (515) 246-7891.
