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It is highly likely that on or shortly after March 1, President Obama will extend the current COBRA premium subsidy through December 2010. In the most likely scenario, employees terminated between March 1, 2010 and December 31, 2010 would qualify for the COBRA subsidy for 12 months.

If passed, this extension will mean another round of COBRA notifications for overworked HR pros.

Currently, workers who lost their jobs (through no fault of their own) between September 1, 2008 and (more…)

The COBRA subsidy extension imposes even more notification duties and red tape on employers. This includes sending notification of the COBRA subsidy extension to: 

• Any employee terminated on or after October 31, 2009
• Any employee within 60 days of the end of the initial 9-month COBRA subsidy period
• Every qualified beneficiary or dependent of the above employees 

In addition, employees who were terminated in December 2009 must be notified of the COBRA subsidy premium for the first time.

Every individual who is notified under the COBRA premium subsidy has a full 60 days after notification to enroll in COBRA – even if he or she declined COBRA (more…)

In late-breaking news, on December 16, 2009  Congress passed a law to extend both the COBRA subsidy implemented under the stimulus package in February 2009, and unemployment benefits to millions of Americans. 

Still, many workers who were eligible for the subsidy at its inception have already lost coverage – they exhausted available benefits on December 1, 2009. Regardless of the date of termination, the COBRA premium reduction is available for a maximum of 9 months.

Employees terminated on or before December 31, 2009 will qualify for the original COBRA subsidy. The subsidy allows workers to continue their current health insurance coverage while paying just 35% of the COBRA premium. The balance of the COBRA premium is paid by the employer, who takes a credit on the quarterly payroll taxes, passing the cost along to the federal government.

Actually, until President Obama signs the extension into law, an employee terminated in late December 2009 might not qualify for the COBRA subsidy, if his or her group insurance coverage continues until January 1, 2010.

Any employer who is considering laying employees off in early January might actually be doing the workers a favor by terminating them prior to December 31, 2009 unless the extension goes into effect ASAP.

In order to qualify for the COBRA subsidy, the worker must lose his or her job through no fault of their own. Employees who voluntarily resign, or who are fired for misconduct, do not (more…)

On April 2, 2009 the U.S. Department of Labor issued additional regulations regarding the COBRA Premium Reduction under ARRA, the American Recovery and Reinvestment Act of 2009.

Under the ARRA, employees who were involuntarily terminated between September 1, 2008 and December 31, 2009 can keep their group health insurance and pay just 35% of the usual premium. The remaining 65% of the health insurance premium is paid by the federal government, through a credit on the employer’s quarterly payroll taxes.

Because of the new program, terminated workers who initially declined COBRA now have an opportunity to sign up for it, during the Special COBRA Election Opportunity. Each employer or COBRA administrator must inform eligible workers by April 17, 2009 of the opportunity to elect COBRA coverage at the subsidized rate. The Special COBRA Election Opportunity period began on February 17, 2009 and ends 60 days after the plan provides the required notice.

The COBRA Premium Reduction is in place for 9 months. During that time, employees pay just 35% of the total COBRA premium.

The COBRA Premium Reduction does not extend COBRA coverage for a longer period – in most cases, the employee is eligible only for coverage for 18 months.

A number of states have extended COBRA-style coverage to employers with fewer than 20 workers on group health insurance. While the COBRA subsidy does apply to these smaller “state plan” employers, the Special Election Opportunity does not. Employees who are terminated today (more…)

The 2009 COBRA Premium Reduction under the ARRA affects millions of laid-off workers, and employers are being deluged with questions on it. Here are some answers to the most frequent questions.

COBRA, the Consolidated Omnibus Budget Reconciliation Act, permits employees to extend their group health insurance after being laid off or terminated. The COBRA Subsidy reduces premiums for workers who are out of work, though no fault of their own. COBRA regulations are issued through the U.S. Department of Labor.

How much is the COBRA premium reduction?

The COBRA premium reduction is 65%, meaning that the federal government picks up 65% of the tab, while the employee pays just 35% of the usual COBRA premium.

When should employees be notified of the COBRA Premium Reduction? Employees laid off between September 1, 2008 and February 17, 2009 must be informed in writing of the premium reduction by April 17, 2009.  Employees then have 60 days after receiving notice to opt to sign up for COBRA under the reduced premium.

Employees who are terminated between February 17, 2009 and December 31, 2009 must be notified of COBRA within 60 days, just as usual. However, that notification will include the reduced premium.

Any laid-off worker who has not received notification at this point, should contact both the previous employer and the insurance administrator.

Can employees who initially declined COBRA sign up now, with the reduced premium?

Yes, an employee who was terminated between September 1, 2008 and February 17, 2009 can sign up for COBRA with reduced premiums during the special election period. This is true, even if the employee initially declined COBRA coverage when terminated.

How long does the COBRA Premium Reduction last? (more…)