Publication

April 20, 2010Client Alert

Congress Extends COBRA Premium Subsidy to Cover Involuntary Terminations Through May 31, 2010

On April 15, 2010, President Obama signed the Continuing Extension Act of 2010 (H.R. 4851) (“CEA”) into law. The CEA extends the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) premium subsidy program to cover involuntary terminations through May 31, 2010. Employers subject to the COBRA (and state continuation coverage laws) will be subject to these new requirements.

Effective Date

The extension of the COBRA premium subsidy to May 31, 2010 is effective immediately. The prior COBRA premium subsidy applied to individuals involuntarily terminated between September 1, 2008 and March 31, 2010.

Next Steps

To date, every time the premium subsidy program has been extended, the Department of Labor (“DOL”) has provided revised general COBRA notices to alert qualified beneficiaries of potential rights under the program. At a minimum, employers should expect that they will be required to provide updated notices to individuals in the following two groups:

  1. Employees who were involuntarily terminated since April 1, 2010. It appears this notice will permit a retroactive election and a 60-day period within which to elect coverage.

  1. Individuals who experience a qualifying event (of any type) on or after April 1, 2010 but prior to May 31, 2010.

The DOL has acted quickly in the past to provide updated model notices. We anticipate they may provide updated notices and related guidance in the next few weeks.

A copy of the new law may be found at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h4851eas.txt.pdf.

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