COBRA Subsidy Is Extended*

The eligibility for the COBRA premium subsidy was about to expire for those individuals who are involuntarily terminated and become eligible for COBRA benefits after December 31, 2009.  However, on December 21, 2009, the President signed legislation that extends the eligibility for the subsidy to those individuals who are involuntarily terminated and become eligible for COBRA coverage before February 28, 2010. 

The legislation also extends from 9 months to 15 months the length of the subsidy period and the extension applies to those who became eligible for the subsidy after February, 2009, even if their initial nine months has already expired.  The extension is retroactive for those individuals who lost COBRA coverage because they stopped paying the premiums due to the expiration of their subsidy.  Thus, individuals who became eligible for the subsidy in March were subsidy eligible through November 30, 2009.  If such an individual did not pay his or her December, 2009 COBRA premium because the subsidy expired, the individual can re-enroll in COBRA and receive the subsidy for December, 2009 (without any gaps in coverage) and another 5 months until May, 2010.

The COBRA subsidy extension was attached to H.R. 3326, the Department of Defense appropriations bill for the fiscal year ending September 30, 2010 which passed by an overwhelming vote in the House of 395 to 35.  According to Rep. Charles Rangel, D-N.Y., chair of the House Ways and Means Committee, “This bill ensures that workers who have lost their jobs through no fault of their own will not lose the unemployment and health benefits they rely upon to provide for their families.  The immediate benefits and assistance provided in this bill help provide some measure of economic security for millions of our fellow Americans struggling during this holiday season, helping ease their pain as they search for their next job opportunity.”

More to come as details of the legislation emerge.

See also, ARRA COBRA Subsidy Information

*Written by guest author Timothy J. Snyder, Esq.  Tim is the Chair of Young Conaway’s Tax, Trusts and Estates, and Employee Benefits Sections.  His primary area of practice is employee benefits, which involves both the benefit provisions of provisions of the Internal Revenue Service and ERISA.  He represents business and professionals in establishing, monitoring, and administering employee-benefit plans, new comparability retirement plans, non-qualified deferred-compensation plans, health, disability and life benefits, COBRA, HIPAA, ADA and ADEA.

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