South Carolina Employment Law & Labor Law Firm - Employment & Labor Lawyers | Gignilliat, Savitz & Bettis - GS&B

Congress has extended COBRA subsidies for workers involuntarily terminated from their jobs for a third time since enacting the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA provided for subsidies for premiums paid for health benefits under COBRA. Employees who are involuntarily terminated from September 1, 2008 through May 31, 2010 are now eligible for a 65% subsidy for up to 15 months. For more information about the subsidies, please click here. 

 

Since the passage of ARRA, the subsidy has been extended several times and in several ways.  The duration of the subsidy was extended from nine (9) months to fifteen (15) months and the eligibility period was extended to include those who became eligible for COBRA due to involuntary termination on or before February 28, 2010. (To view our coverage of the first extension, please click here).  The eligibility period was later extended to include those who became eligible for COBRA due to involuntary termination on or before March 31, 2010. (To view our coverage of the previous extension, please click here.) 

 

On April 15, 2010, Congress passed and the President signed into law the Continuing Extension Act of 2010, which extends the COBRA subsidy eligibility period to include individuals who are involuntarily terminated on or before May 31, 2010.  The Continuing Extension Act extends eligibility retroactively, so individuals involuntarily terminated after March 31st, but before the Continuing Extension Act was passed, are now eligible to receive the subsidy. The Continuing Extension Act requires employers to notify these former employees regarding eligibility.  The current extension means that individuals who became eligible for COBRA due to an involuntary termination that occurs on or before May 31, 2010 may now receive the subsidy for fifteen (15) months.

 

The previous extension also allowed employees to receive the subsidy if they suffered a termination on or after March 2, 2010 that was preceded by a reduction in hours that caused them to lose health coverage.  This provision is carried over into the current extension.

 

The Department of Labor has yet to issue new model notices following this most recent extension of the eligibility period.  The model notices linked to and explained in our previous article should continue to be sent to eligible employees (including those involuntarily terminated since March 31st), but should be modified to reflect the most recent extension of the eligibility period.

 

If you have any questions about your organization's obligations under COBRA or the COBRA subsidy laws, please contact your employment counsel or contact us.