ARRA COBRA Premium Subsidy Update *** Updated May 3rd 2010 ***
In our continuing effort to keep you informed, Capstone is staying abreast of regulatory developments as they pertain to benefits related Department of Labor issues.
We wanted to bring you up to date on the latest developments regarding the original ARRA rules and premium Subsidy…
Congress Extends ARRA COBRA Subsidy to May 31, 2010
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.
If you have any questions/concerns regarding your company obligation surrounding the American Recovery and Reinvestment Act and extensions of the COBRA premium subsidy – please feel free to contact us by sending an email to info@Capstone1.com or calling (702) 227-5727.
We will continue to keep you up to date as more information becomes available.
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