COBRA Subsidy has been Extended

December 22, 2009

As anticipated, the COBRA subsidy has been extended. On December 21, the President signed the Fiscal Year 2010 Defense Appropriations Act. The Act extends the eligibility period for persons involuntarily terminated from employment for an additional two months (through February 28, 2010).

In addition, the maximum period for receiving the subsidy has been extended by an additional six months (from 9 months to 15 months).

The legislation also provides for another six month of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out. Individuals who reached the end of the reduced premium period before the legislation extended it to 15 months will have additional time to pay the premiums related to the extension. To continue their coverage, they must pay the 35% premium costs within 60 days after the law was enacted, or if later, 30 days after notice of the extension is provided by their plan administrator.

The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. Employers will continue to be reimbursed for premium payments through payroll tax credits. The legislation requires employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.

SESCO has updated all required and suggested forms. SESCO's COBRA administrative Manual has also been revised to reflect these new regulations. You may order the forms and/or manual from our website here or by phone as per contact information below.