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COBRA Subsidy Extended

Employee Benefits Law Alert J. Paul Jacobson, Robert D. Rothacker, David P. Olson, Amy A. Ciepluch, Sarah M. Linsley, Marla B. Anderson

On December 21, 2009, the President signed the Department of Defense Appropriations Act of 2010 (the "Act") into law. The Act extends the availability of the 65 percent COBRA premium subsidy that was enacted earlier this year under the American Recovery and Reinvestment Act ("ARRA"). The extension becomes effective immediately.

Highlights of the COBRA Extension

The COBRA subsidy will be available to workers who lose their jobs on or before February 28, 2010.

The maximum COBRA subsidy period is extended from 9 months to 15 months.

Availability

The Act does not change the amount of the subsidy or the rules for eligibility, other than it extends the subsidy to "assistance eligible individuals" who are involuntary terminated on or before February 28, 2010. As noted above, it also changes the duration of the subsidy from 9 months to 15 months. This change applies not only to workers who lose their jobs between January 1, 2010 and February 28, 2010, but also to previously terminated individuals who are currently receiving the subsidy, and terminated individuals who previously reached the end of their nine-month subsidy period.

For additional information on determining who is an assistance eligible individual, the amount of the subsidy and other applicable rules, please see our prior updates/alerts located here.

Notification Requirements

The Act requires plan administrators to notify affected individuals of the COBRA subsidy changes no later than February 17, 2010. Affected individuals include those who have recently become eligible for COBRA, those who are currently receiving the subsidy, and individuals who have run out of subsidy under ARRA. The Department of Labor is expected to issue additional guidance on the timing of notifications and extended election periods in upcoming weeks. Normal COBRA notice requirements and timing rules apply for individuals who become COBRA-eligible after December 19, 2009.

If you have questions about the Act, please contact Paul Jacobson at (414) 277-5631 / paul.jacobson@quarles.com, Robert Rothacker at (414) 277-5643 / robert.rothacker@quarles.com, David Olson at (414) 277-5671 / david.olson@quarles.com, Amy Ciepluch at (414) 277-5585 / amy.ciepluch@quarles.com, Sarah Linsley at (312) 715-5075 / sarah.linsley@quarles.com, Kerri Hutchison at (414) 277-5287 / kerri.hutchison@quarles.com, Marla Anderson at (414) 277-5453 / marla.anderson@quarles.com or your Quarles & Brady attorney.