Clients maintaining group health plans subject to COBRA should be aware that the special 9-month 65% COBRA subsidy for involuntary terminations/loss of group health plan coverage which occurred between September 1, 2008 and December 31, 2009, has been expanded (1) from 9 to 15 months, and (2) to be applicable to involuntary terminations occurring on or before February 28, 2010 (note: only the termination and not the loss of coverage must occur by that date).
A key element is that individuals who qualified for and elected the original 9-month subsidy, exhausted that entitlement and dropped their (unsubsidized) COBRA coverage, may retroactively elect to receive the additional 6 months of subsidized COBRA coverage (i.e., by paying the 35% amount retroactively by the later of February 17, 2010 or within 30 days from the date of the notice described in the next sentence). A notice of this opportunity (a model notice is expected to be issued by the U.S. Department of Labor shortly) must be provided to such individuals within the first 60 days of their “transition period” — the first coverage period that began prior to December 19, 2009 for which the premium subsidy would apply due to the extension of the period from 9 to 15 months. In addition, those who did not drop their COBRA coverage at the end of the 9-month subsidy period (i.e., who continued to pay 100%) are to be entitled to a reimbursement payment or credit for 65% of the COBRA premium paid for as many as 6 months following the end of the 9-month subsidy period.
This alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.
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