As employers continue to consider health care reform and its coming changes to their workforces, Congress has approved legislation extending the federal COBRA premium subsidies to employees involuntarily terminated from employment through May 31, 2010.
The Continuing Extension Act of 2010 was passed by both the U.S. Senate and the U.S. House on April 15. President Obama signed it into law the same day.
The previous extension of the 15-month, 65 percent federal premium subsidy for involuntarily terminated employees expired March 31. The Continuing Extension Act further extends the COBRA subsidy eligibility period by two months to May 31, 2010. Assistance-eligible individuals will be eligible for up to 15 months of the subsidy.
It’s important to note that this recent amendment to ARRA’s COBRA subsidy program, as with others in the past, will not affect those assistance-eligible individuals who are already receiving the premium reduction and who remain eligible to continue to receive the subsidy for up to 15 months.
The subsidy program was first enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA). It has been amended several times, including by the Temporary Extension Act in March 2010, which made the subsidy available to an additional group of qualified individuals.
Individuals who experience an involuntary termination of employment on or after March 2, 2010, that follows a reduction in hours of employment occurring on or after September 1, 2008, are eligible for the subsidy program. Under COBRA there is no second qualifying event that follows a reduction in hours of employment. However, under ARRA, employers will need to report these second events.
Also, as in the previous extension, if the qualified beneficiary did not elect coverage as a result of their reduction in hours, the assistance-eligible individual would be entitled to elect COBRA as of the involuntary termination of employment, and any gap in coverage would be disregarded for purposes of pre-existing condition limitation.
Ceridian will continue to monitor Congressional activities regarding the COBRA premium subsidy program. As circumstances change, we will keep you informed.
Currently, Ceridian is finalizing its COBRA notices based on recent federal and state guidance. Where Ceridian is responsible for the notification, we will be providing notices to your participants within the timeframes specified in the guidance from the U.S. Department of Labor (DOL).
Our cross-functional teams are working to complete the following:
• Our systems are being updated to change the end date to May 31, 2010.
• Qualifying Event Notifications will be updated to include a revised Special Notice statement on the first letter.
• We are updating and printing additional notices required from the DOL guidance. Notices will be sent to all assistance-eligible individuals who experience a reduction of hours followed by an involuntary termination of employment on or after March 2, 2010.
• FAQs and Service Alerts are being updated as well.
For More Information about the COBRA premium reduction extension, you may visit the DOL Web site at www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html.
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