Published January 2010
After months of deliberation, the COBRA subsidy has been extended. President Obama signed H.R. 3326 into law on December 19, 2009. This law has brought a few changes to the COBRA subsidy in addition to the extension.
- Reverses earlier guidance that AEIs would have to start COBRA coverage on or before December 31, 2009 and extends the COBRA subsidy for AEIs with a qualifying event occurring on or before February 28, 2010, without regard to when the COBRA coverage period begins.
- For example, involuntary termination on February 28, 2010 is eligible for the subsidy where March 1, 2010 is not eligible.
- Extends the maximum subsidy period from 9 months to 15 months. AEIs that exhausted the previous 9 month subsidy can get the subsidy for another 6 months (by re-enrolling on the plan retroactively) if they remain AEI and their COBRA period had not ended.
- There is no change in the subsidized COBRA rate – that is still 65% of the COBRA premium.
- A notice describing the revised program must be sent to all AEIs (as of 10/31/2009) that either dropped their COBRA coverage or kept their COBRA coverage and paid the full unsubsidized premiums. AEIs may pay subsidized premiums for retroactive coverage and receive a credit or refund for overpayments. These notices must be provided by February 17, 2010. AEIs must pay for coverage no later than February 17, 2010 or 30 days after their notice was provided, whichever is later.
- A notice describing the revised program must be sent to anyone terminated from employment (voluntarily or not) on or after October 31, 2009. These notices must be provided by February 17, 2010 or the usual deadline for COBRA Qualifying Event notices, whichever is later.
- Going forward, the description of the new COBRA subsidy program will be included in the COBRA Qualifying Event notices.
If you have any questions about the COBRA subsidy extension, sign up for our free webinar. Additional communication will be provided soon to our COBRA clients and agents regarding how BASIC will administer the COBRA subsidy extension and meet the new notice requirements.
Need help with the Subsidy Extension and COBRA Compliance?
This extension requires more work for employers. Another extension in January is being considered by legislators which will require more work to comply. Now is the best time to outsource your COBRA compliance. Let BASIC handle all the new special notificationsrequired by the extension, prepare for you a 941 report for subsidy reimbursement and field all the compliance questions from terminated employees.
COBRA is already riddled with compliance pitfalls; add in regulation changes with ARRA and Subsidy extensions and it takes an expert to navigate. We specialize in COBRA so you can focus on your active employees and current operations.
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