Insurance Q&A

December 22, 2009

COBRA Subsidy in Defense Appropriations?

Filed under: Uncategorized — rrroark @ 1:53 pm

President Obama has signed H.R. 3326, a defense appropriations bill with a provision that will let involuntarily terminated workers seek the temporary 65% federal health benefits continuation subsidy up until Feb. 28, 2010. The Consolidated Omnibus Budget Reconciliation Act benefits continuation subsidy provision also will extend the period when terminated workers can get the subsidy to 15 months. Originally, the application cut-off date was going to be Dec. 31, 2009, and the subsidy was going to last just 9 months.

Congress created the COBRA subsidy program earlier this year, when it included the original subsidy provision in the American Recovery and Reinvestment Act of 2009. Before Congress created the subsidy, employees eligible for COBRA continuation benefits usually could get them only if they could pay 102% of the full cost of the coverage premiums.

The provision will also:

1. Require a special notice describing the new subsidy provisions to go out to all AEIs who have been on COBRA on or after Nov. 1, 2009, or whose qualifying event is an “involuntary termination” of employment occurring on or after Nov. 1, 2009;

2. Allow for a 60-day period for the retroactive payment of premiums for “assistance eligible individuals” whose subsidy period expired Nov. 30 and who failed to pay their premium for December coverage.

3. Let employees who are involuntarily terminated before Feb. 28, 2010, but get COBRA coverage that starts after Feb. 28, 2010, qualify for the subsidy.

The U.S. Department of Labor, the U.S. Department of Health and Human Services, and the Internal Revenue Service all could issue guidance concerning the subsidy extension.

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