COBRA Subsidy Extended to March 31, 2010

President Obama signed the Temporary Extension Act of 2010, H.R. 4691, on March 2, 2010, extending the COBRA premium subsidy for employees experiencing an involuntary termination from March 1 through March 31, 2010. COBRA premium subsidies expired on February 28, 2010; however, among other stopgap provisions addressing expiring unemployment benefits, this Act retroactively restores the subsidy to assistance eligible individuals. COBRA subsidy eligibility continues to be 15 months.

Effective immediately, health plan sponsors should amend COBRA notices by replacing February 28, 2010 with March 31, 2010. Please click HERE for the Department of Labor notice.

H.R. 4691 also expands premium assistance eligibility to those having experienced a reduction in hours followed by a termination of employment. In order to be considered an assistance eligible individual, an employee must have experienced a reduction in hours between September 1, 2008 and March 31, 2010. A subsequent termination of employment must have occurred on or after March 2, 2010.

Individuals affected by both: (1) a reduction of hours between September 1, 2008 and March 31, 2010 and (2) a termination of employment on or after March 2, 2010 are required to receive notice of the opportunity to apply for the subsidy. The application for the subsidy must be completed by the later of May 1, 2010 or 30 days after the notice was provided to the former employee.

Additionally, plan sponsors and health insurance issuers may now be subject to civil actions, as well as a penalty assessment of $110 per day for failure to comply within 10 days of an assistance eligibility determination. Click HERE to review H.R. 4691.

Further expansive legislation, H.R. 4213, is in consideration to extend the COBRA premium subsidy through Dec. 31, 2010. Oswald Companies will continue to monitor legislative developments and provide current updates, as applicable.

Please direct any questions to Andrea Esselstein; 216.658.5012, aesselstein@oswaldcompanies.com