03.03.2010 Congress Expands COBRA Subsidy Program
Congress has further extended and expanded the COBRA premium subsidy program. The Temporary Extension Act of 2010 (the Act), signed by President Obama on March 2, 2010, extends the eligibility period to March 31, 2010, and also expands and clarifies the subsidy program. Prior to the Act, the eligibility period for the 65 percent COBRA premium subsidy would have expired on Feb. 28, 2010.

Specifically, the Act makes the following changes to the COBRA premium subsidy program.

  • Extended Eligibility Period. Individuals are involuntarily terminated through March 31, 2010, are now eligible for the COBRA premium subsidy.
  • Reduction in Hours Qualifying Event. Individuals who lost health plan coverage due to a reduction in hours of employment between Sept. 1, 2008, and March 2, 2010, and who are involuntarily terminated after March 2, 2010, are now eligible for the COBRA premium subsidy. Previously, an individual who had an involuntary termination following a reduction in hours was not eligible for the subsidy.
  • DOL and IRS Must Accept Reasonable Eligibility Determinations. The Department of Labor and Internal Revenue Service may not challenge an employer’s reasonable, documented determination that an individual was involuntarily terminated.
  • Noncompliance Penalty. The DOL may determine that an individual is eligible for the COBRA premium subsidy, overriding an employer’s determination. Employers must comply with a DOL determination within 10 days or face a $110 per day penalty.

Please contact any of the Williams Mullen Employee Benefits Group lawyers if you have questions regarding this or any other Employee Benefits matter.
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