HR Helper

Your Source for Human Resource Help

You are here: Home / American Recovery and Reinvestment Act / Subsidy Extended

Subsidy Extended

by Leave a Comment

COBRA Subsidy Extended Again!

COBRA Subsidy ExtendedOn March 2, 2010 the President signed the Temporary Extension Act of 2010 (H.R. 4691). Section 3 of this act revises the COBRA Premium Subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA).

 

Under the revisions:

  • Employees who experience an involuntary termination of employment on or before March 31, 2010 and meet all other requirements will now be eligible for the COBRA Premium Subsidy.
  • Employees who experienced a reduction of hours on or before September 1, 2008 and terminate employment on or after March 2, 2010 may now be eligible for the COBRA Premium Subsidy.
  • The employer/plan sponsor penalties and remedies that apply to the COBRA Notification requirement, now also appear to apply to the ARRA Notification requirements.

What does that mean for employers?

Current ARRA Notifications must be updated with the new law deadlines and also include the new reduction of hours eligibility information. If you are using BCL Systems, Inc. COBRA Services this has been done for all notices mailed after 3/3/2010.
Notice of the effect of the new law must be mailed to the following individuals within the next 60 days:

  • COBRA eligible employees whose qualifying event was a reduction of hours on or after 10/1/2008 as these individuals would still be within the 18 months COBRA coverage period.
  • COBRA participants whose COBRA notice was mailed out between 2/28/2010 and 3/3/2010.

While the reduction of hours clarification was not unexpected, please note that this provision does not extend the time the person must be provided COBRA coverage and only applies to those employees who terminate employment after March 2, 2010.

So basically, if you have an employee who had a reduction of hours on October 5, 2008, lost health coverage effective October 31, 2008 and terminated employment on March 2, 2010; this employee would be able to elect COBRA coverage for the month of March, 2010 even if they declined it the first time and may be eligible for the COBRA premium subsidy.

Their COBRA coverage would be effective 3/1/2010 and end on 3/31/2010 (the end of the original 18 months of COBRA coverage eligibility due to the reduction of hours) and they would not be eligible for payment of any medical claims between 11/1/2008 and February 28, 2010.

 

Human Services - Client ServicesBCL Systems, Inc.

The source in Human Resources

This information is not meant to provide legal advice and a legal professional should always be consulted. This entire article is protected by Copyright and any unauthorized use is strictly prohibited. For permission to utilize this article, please contact BCL Systems, Inc. at robinb@bclsys.com.

>