COBRA Subsidy

New legislation has extended the federal COBRA premium subsidy program, which pays 65 percent of the COBRA health insurance premiums for laid-off workers. The benefit had been scheduled to lapse on December 31, 2009.  The extension provides relief in three ways:

1) The original nine-month subsidy period in the federal American Recovery and Reinvestment Act (for laid-off workers who maintain employer-sponsored coverage under federal COBRA and state continuation laws) has been extended to 15 months.  This means that workers who enrolled in the program when it began in March 2009—and all subsequent enrollees—are now entitled to 15 months of premium subsidies, instead of nine months.

2) Special transition rules grant new rights for two categories of employees who were caught up in the expiration.  First, those employees who allowed their COBRA coverage to lapse because they lost subsidies as of November 30, 2009, will have a new right to reenroll in COBRA and take advantage of the ongoing premium subsidy by making retroactive payments towards the premium owed, based on their former 35 percent payment.  Second, employees who paid the full premium for COBRA coverage after their subsidy lapsed will be entitled to a refund or credit that reflects the subsidy.  Affected workers are entitled to notice of these new rights and have until February 19, 2010, or 30 days after they receive the notice—whichever is later—to exercise their rights to extend the subsidy period or re-enroll in COBRA.

3) Congress also approved a two-month extension of the eligibility period for program participation, which previously applied only to those who enrolled in COBRA prior to January 1, 2010, as a result of job loss. Now, anyone who becomes COBRA-eligible as a result of job loss prior to February 28, 2010, may obtain the subsidy, even if their COBRA enrollment occurs after that date. Since COBRA enrollment often lags behind job loss, this extension also provides subsidy eligibility to those who lost their jobs in November or December, but were not yet enrolled in COBRA by January 2010.

For more, go to www.dol.gov/ebsa/newsroom/2009/ebsa122109.html, www.dol.gov/ebsa/cobra.html, www.dol.gov/ebsa/newsroom/fscobrapremiumreduction.html or www.dol.gov/ebsa/cobra.html.

New York State’s COBRA law has recently been amended to provide up to 36 months of continuation coverage under a group health plan for covered employees and their dependents who have been involuntarily terminated as well as extending benefits to dependents up to age 29.  Read more at www.npccny.org/info/hdi15.htm.

This article originally appeared in the February 2010 issue of New York Nonprofits, the monthly publication of the Nonprofit Coordinating Committee of New York, Inc.  www.npccny.org