COBRA Subsidy Extension
On March 2, 2010, President Obama signed a law (Temporary Extension Act of 2010, enacted as HR 4691; became Public Law 111-144), that, among other things, modifies the COBRA subsidy, in a couple of ways.
First, the law extends the COBRA subsidy eligibility period from February 28, 2010 to March 31, 2010. This means that individuals involuntarily terminated between September 1, 2008 and March 31, 2010 would be eligible for up to 15 months of the COBRA subsidy.
Secondly, this law provides that a reduction in hours, resulting in COBRA continuation coverage, followed by an involuntary termination of employment, would be considered a COBRA subsidy-qualifying event. Generally, second qualifying events are not COBRA subsidy-qualifying. The involuntary termination subsequent to the reduction in hours of employment must have occurred on or after March 2, 2010. These individuals must be notified of their right to receive the COBRA subsidy within 60 days from the date of the individual’s involuntary termination. The duration of the COBRA subsidy would be measured from the date of the individual’s reduction in hours, rather than the involuntary termination date.
There are several other bills pending that would further modify the COBRA subsidy provisions. It is very possible that the COBRA subsidy law will be further modified. Stay tuned for further developments.
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