Health Care Insurance Update: Changes to COBRA in 2010

Part of last year’s American Recovery and Reinvestment Act (ARRA, aka the stimulus bill) included a federal COBRA premium subsidy for folks who lost their jobs between September 1, 2008 and December 31, 2009. Under its provisions, the federal government would provide a 65% subsidy to help “assistance- eligible individuals” pay the premiums to continue coverage under their former employer’s group health insurance. Now there’s some good news if you lose you job in the New Year.

The 2010 Defense Appropriation Bill included provisions to extend the period during which firing or lay-off will trigger subsidy eligibility, as well as extending the total time you can receive the subsidy…but only if you’re canned on or before February 28, 2010. Under the new extension, instead of the original nine months, you can now receive the 65% COBRA subsidy for 15 months.
If your subsidized COBRA coverage has already run-out, the new provision also grants you additional time to pay your portion of the subsidized health insurance premium and to get COBRA coverage retroactively. There are limitations, however. Those payments must be made within 60 days of the enactment of the new legislation or within 30 days of receipt of a new notice that your company’s health care plan administrated is now required to issue. Here’s how that works:

If you are or were eligible for the COBRA health care subsidy on or after October 31, 2009, or if you were fired or laid-off on or that same date, your employer’s group health insurance plan administrator must provide you with notice of the new subsidy rules.

The same notice has to be issued to anyone who was eligible for subsidy assistance that either dropped COBRA or paid the full premium when their nine-month subsidy period ended. The notice must inform you that you are now eligible to reinstate your COBRA coverage retroactively at the subsidized rate or receive a refund or credit for any overpayment.

The new legislation also modifies COBRA subsidy eligibility requirements.  Eligibility is now solely determined by the date your were fired or laid off, and does not also depend on the date you COBRA coverage began.  You can find more information and updates about the changes to the COBRA health insurance subsidy at the U.S. Department of Labor’s website.



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