Frequently Asked Questions (FAQs)
The original version of the COBRA subsidy legislation made subsidies available to individuals involuntarily terminated from employment between Sept. 1, 2008, and Dec. 31 2009. The closing date for eligibility was subsequently extended to Feb. 28, 2010. Congress once again has extended the eligibility date.
Extended Eligibility Date
The eligibility period for the COBRA subsidy is extended to an end date of May 31, 2010. The duration of subsidies remains at up to 15 months.
Reduction of Hours as a Qualifying Event for COBRA Subsidy
Individuals are eligible for subsidies if they have a reduction of hours followed by involuntary termination of employment on or after the enactment of the bill (March 2, 2010).
Special Rules for Individuals Losing Coverage Due to a Reduction of Hours:
- New Election: Individuals have a qualifying event if they had a reduction of hours and did not make a COBRA election (or made an election and discontinued it) and were involuntarily terminated from employment on or after the enactment of the bill.
- Period of Continuation Coverage: The period of continuation coverage is calculated as if the qualifying event were the reduction of hours.
- Premium Payments: These individuals are not required to pay the COBRA premium for the time between the reduction of hours and involuntary termination of employment.
- Preexisting Conditions: The time between the reduction of hours and involuntary termination of employment is not considered in calculating a 63 day lapse of coverage under HIPAA.
- Notices: Individuals who have a reduction of hours must receive an additional notice from the group health plan administrator (or other entity, such as an insurer in the case of state continuation coverage) within 60 days of involuntary termination of employment. The additional notice must contain information on the bill provisions relating to reduction of hours followed by involuntary termination of employment as a qualifying event.
Clarifications of December 2009 COBRA Subsidy Extension
- Premium Due Dates for Retroactive Payments: Individuals eligible for additional months of COBRA subsidies due to the increase from nine to 15 months of subsidies must pay their share of the premium by the latter of 60 days after enactment of § 3 of H.R. 4691, 30 days after receipt of notice of subsidies, or the time usually permitted under COBRA (within 30 days after due date or within any longer time permitted by the plan).
- Definition of Transition Period Under December 2009 Subsidy Extension: The transition period definition is amended to refer to a qualifying event of involuntary termination of employment rather than referring solely to a "qualifying event" to distinguish involuntary termination from a reduction of hours.
Termination Date of Subsidies
Subsidies terminate, at the latest, 15 months from the first day of subsidy (not 15 months from the first day of the first month of subsidy eligibility, as in ARRA).
Possible Further Subsidy Extension
Please note that Congress has under consideration other legislation that would amend COBRA subsidy. It is anticipated that this legislation will be proposed to extend the eligibility "window" beyond March 31, 2010.
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