COBRA SUBSIDY EXTENSION

The 65% Federal COBRA subsidy for involuntarily terminated employees has been extended and expanded.

• Any employee who is involuntarily terminated after September 1, 2008 and on or before February 28, 2010 and elects COBRA (an "assistance eligible individual") will be eligible for the subsidy—even if the employee’s COBRA coverage starts after the extended deadline.
  
  
• The subsidy period has been expanded from nine to fifteen months for all assistance eligible individuals.

Notice Requirement

Plan administrators must notify those who are assistance eligible at any time on or after October 31, 2009 of the new subsidy extension provisions. The deadline for notifying these individuals is February 17, 2010. Going forward, the general COBRA notice must be updated to reflect the extension. We understand that the Department of Labor will issue model notices that plans may use.

Election for Retroactive COBRA Coverage

An assistance eligible individual who dropped COBRA coverage upon the expiration of their nine month subsidy period may elect to pay the COBRA premiums (as reduced by the subsidy) retroactively to maintain subsidized COBRA coverage for up to an additional six months without a gap. Assistance eligible individuals have until the later of February 17, 2010 or 30 days from the date of notice from the plan administrator to re-elect COBRA coverage and pay the subsidized premium. If an assistance eligible individual has already paid the full premium for COBRA coverage, the excess must either be credited against additional months of coverage or refunded.

Past Alerts on this Topic

DOL Issues Model Notices for American Recovery and Reinvestment Act (3.20.09) 

New COBRA Changes Require Immediate Employer Action (2.19.09) 

Contact Us

If you have any questions about the topics covered in these alerts, please contact a member of Oppenheimer’s Employee Benefits Group. 

This alert is a copyrighted publication produced by Oppenheimer Wolff & Donnelly LLP. The information contained in this alert is of a general nature and is subject to change. Readers should not act without further inquiry and/or consultation with legal counsel.