Extending the COBRA Premium Subsidy…
The American Recovery and Reinvestment Act of 2009 (ARRA) provided a temporary subsidy for the cost of COBRA continuation health coverage. On December 21, 2009, President Obama signed legislation extending the COBRA premium subsidy. The new law addresses the uncertainties employers were facing regarding the subsidy. The following facts concerning the extension should be of interest to all employers and is excerpted from the GCG Financial, Inc. Legislative Brief:
Length of Subsidy – Extended to 15 months
Retroactive Payments – How to Handle Employees Caught in the Middle
AEIs who failed to pay their COBRA premiums once their initial subsidy period expired can retroactively pay the premiums to maintain COBRA at subsidized rates for the additional six months. The premiums must be paid no later than February 19, 2010, or 30 days after the AEI receives notice of the extension, whichever is later.
If an AEI paid the full amount of the COBRA premiums after the 9-month subsidy period ended, but is now eligible for additional assistance, the employer must either reimburse the individual for the excess premium amount paid or provide a credit that reduces later premium payments.
The legislation includes additional notice requirements for group health plans. In general, plan administrators must provide notice of the subsidy extension to individuals who are AEIs at any time on or after October 31, 2009. The notice must be provided by February 19, 2010. Also, election notices sent to individuals who experience a qualifying event on or after October 31, 2009, must include information regarding the subsidy extension.
The new law also requires notices to the following individuals: (a) those who are eligible to make retroactive premium payments because they let their COBRA coverage expire once their subsidy period ended, and (b) those who are entitled to receive reimbursement or credit because they are eligible for additional assistance but paid the full amount of the premium for coverage. The plan administrator must notify these individuals of the subsidy extension within the first 60 days of the individual’s transition period. The transition period includes any period of coverage beginning before December 21, 2009, that will now be covered by the subsidy due to the extension.
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