Under the American Recovery and Reinvestment Act of 2009 (ARRA), the federal government pays 65 percent of COBRA premiums for up to 9 months for Assistance Eligible Individuals (AEIs) who were involuntarily terminated between September 1, 2008, and December 31, 2009. An extension was signed into law by President Obama on Saturday, December 19, 2009 as part of the Department of Defense Appropriations Act of 2010 (H.R.3326). As a result:

• AEIs can now receive the COBRA subsidy for 15 months instead of the 9 months under ARRA. This will be cumulative, meaning that any months which have already been subsidized will be part of and count toward the 15 months.
• Eligibility of the subsidy will end on February 28, 2010 instead of December 31, 2009.  This means that any COBRA-eligible individual that has been involuntarily terminated from their job before February 28, 2010 shall have the right to the subsidy.

This legislation also allows those Assistance Eligible Individuals who exhausted their full 9-month COBRA subsidy period prior to the date of enactment (i.e. December 19, 2009), and who failed to make a timely premium payment during the transition period, to reinstate coverage upon payment of all applicable premiums within 60 days of the date of the enactment or, if later, 30 days after notice is provided.

Employer Responsibility
Employers will be required to provide notice describing the extension to anyone who was an AEI on or after October 31, 2009 and all individuals who have experienced a COBRA qualifying event of termination of employment (voluntary or involuntary) on or after October 31, 2009.

Additional Guidance
The Department of Labor (DOL) has until January 18, 2010 to provide additional guidance regarding this extension and associated notice requirements.  Specifically, the extension includes notice requirements as well as requirements for the handling of late payments and over payments resulting from individuals who may have already exhausted their nine-month subsidy.

More information will be communicated as it becomes available.

Click here for the Department of Labor COBRA Fact Sheet