December 2009

COBRA Premium Subsidy Extended

On December 21, 2009, President Obama signed a bill extending the COBRA premium subsidy that was first instituted under the American Recovery and Reinvestment Act (ARRA). ARRA created a temporary government subsidy of COBRA premiums for individuals who were involuntarily terminated from employers with 20+ employees between September 1, 2008, and December 31, 2009, and who also became eligible for COBRA continuation coverage during that time period.

Effective immediately, the new bill extends the COBRA premium subsidy in two ways: 

• It extends the eligibility period for the COBRA premium subsidy to any individual who is involuntarily terminated (called Assistance Eligible Individuals or AEIs) for an additional two months (through Feb. 28, 2010). 
• It extends the maximum premium subsidy period for AEIs receiving the subsidy for an additional six months (from nine to 15 months).

Unlike the initial ARRA rule, this new bill does not require that COBRA coverage begin by the end of the eligibility period (Feb. 28, 2010). Rather, it states that a person is considered an AEI as long as the involuntary termination occurs by Feb. 28, 2010 and is entitled to COBRA coverage as a result of that event.

In addition, any AEI who reached the end of their premium subsidy period prior to this legislation and then dropped COBRA must again be offered the subsidized coverage so that they now can pay the reduced premium for up to six more months. AEIs whose subsidy ended on December 1, 2009 but remained on COBRA at the full premium rate for December and/or January will be notified and will receive credit for 65% of their premium that is once again considered subsidy eligible.

 

Small Employers Subject to State Continuation Guidelines

For employers with under 20 employees subject to State Continuation coverage, the Connecticut Department of Insurance is currently formulating their policy for the COBRA subsidy extension in conjunction with the U.S. Department of Labor, CMS, and NAIC, and is expected to issue guidance within 15 to 30 days of enactment. CBIA will keep you informed as soon as the State issues their guidance.

Employers currently enrolled in CBIA's free COBRA Continuation Service can expect CBIA to administer these new subsidy provisions without interruption.