If you’re on Cobra, coverage information is as critical to your wallet as it is to your well-being. But, like most folks, you probably have so much on your plate these days, you’re missing important updates.
Last week, for instance, we received a call from one of our small business clients. Their office manager thought she read that COBRA received another extension. But she wasn’t sure. Was it true?
The answer is YES. On December 22, 2009, President Obama extended federal subsidy of COBRA for an additional six months.
Some Background:
The first federal subsidy, signed into law earlier in 2009 as part of the economic stimulus package, helped fund COBRA premiums for employees who were laid off between September 1 and December 31, 2008 — “involuntarily terminated” was the eligibility language. Eligible employees paid 35% of the COBRA premium, while employers paid the remaining 65% and received a tax credit.
The premium reduction was also made available for group health insurance, which is required by State law to provide comparable continuation coverage (such as some “mini-COBRA” laws).
Good News. The Recent Extension . . .
- Adds two months to the COBRA premium reduction eligibility period, which now ends February 28, 2010.
- Increases the maximum period for receiving the subsidy, adding an additional six months, taking it from nine to fifteen months.
- Allows for an extension of the typical grace period for those individuals whose subsidy ended before this extension was passed and couldn’t afford COBRA without it. You must pay your portion of the COBRA premium at the reduced rate by the new grace period. (Contact your carrier or speak to your Human Resource Department for specific information.)
Important Considerations. . .
- If you paid 100% of the COBRA premium in December, after your subsidy expired, you are eligible for a credit or reimbursement of the overpayment. Contact your plan administrator for further information.
- Be on the lookout for “notice” requirements that must be provided by plan administrators to all individuals who have qualifying events from September 1, 2008 through February 28, 2010.
Information changes rapidly and it comes at us from all sides. That’s why it’s helpful to have a reliable resource, like this Blog. We’ll work hard to give you critical, updated news and helpful links. For additional COBRA information, including helpful questions and answers, check out the Department of Labor’s website at:
http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html