COBRA Subsidy Extended to March
31, 2010
The White House has
confirmed that President Obama signed H.R. 4691, known as the
"Temporary Extension Act of 2010" into law on Tuesday, March 2, 2010.
The bill takes effect immediately.
Prior to the enactment of
this bill, COBRA premium assistance was not available to anyone terminated
after Feb. 28, 2010 due to the expiration of the previous extension. The
Temporary Extension Act of 2010 will immediately allow those who experience
an involuntary termination of employment through March 31, 2010 to be
treated as an assistance-eligible individual for purposes of the COBRA
premium assistance.
The law also changes the
eligibility to receive premium assistance for those who have experienced a
reduction in hours followed by a termination of employment. In order to be
considered an assistance-eligible individual, an employee must have
experienced a reduction in hours between Sept. 1, 2008 and March 31, 2010.
However, the termination of employment must have occurred on or after March
2, 2010.
Individuals affected by
both 1) a reduction of hours between Sept. 1, 2008 and March 31, 2010 and
2) termination of employment on or after March 2, 2010 are required to
receive a notice informing them of the opportunity to apply for the
subsidy. The application for the subsidy must be completed by the later of
May 1, 2010, 30 days after the notice was provided to the former employee,
or by the end of the applicable grace period. The law also clarifies that
no payment is required for COBRA coverage between the reduction in hours
and the involuntary termination of employment.
The law also authorizes
the Secretary or an affected individual to bring a civil action against the
plan sponsor or health insurance issuer, as well as assess a penalty up to
$110 per day for failure to comply within 10 days of a determination of
eligibility as an assistance eligible individual.
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