On December 19, President Obama signed legislation extending the COBRA premium subsidy that was set to expire on December 31.  The subsidy allows COBRA participants who meet certain eligibility requirements to pay 35% of the premium for their COBRA coverage.  Some key provisions of the new law include:

●  The maximum duration of the premium subsidy is extended from nine months to 15 months.

●  The eligibility period relating to involuntary terminations is extended to February 28, 2010.  Formerly, an employee had to be involuntarily terminated by December 31 to be eligible for the subsidy.

●  COBRA coverage no longer needs to begin by the end of the eligibility period (February 28).  Under the former law an employee not only had to be involuntarily terminated by December 31, but COBRA coverage had to start by December 31 as well.  Since many plans provide for coverage through the end of the month, an employee who was terminated in December but began COBRA coverage on January 1 was not eligible for the subsidy.

●  Eligible individuals can retroactively reinstate or extend their coverage.  For example, assume a beneficiary’s initial nine months of subsidized premiums ended in November and he or she did not pay the full un-subsidized premium for December.  The beneficiary may now reinstate coverage by paying the subsidized premium for December.

●  Plan administrators must provide notice of the new extended benefits to all individuals who became eligible for the subsidy between October 31, 2009 and December 19 (the date the extension was enacted).  This notice must be given within 60 days of December 19.  For employees experiencing a qualifying event between now and February 28, notice of the premium subsidy must be given within 60 days of the qualifying event.  Other notice requirements may also apply.

Taft attorneys in the Labor and Employment practice area are available to consult for further details.