The COBRA premium subsidy program expired on Aug. 31, 2011, but some employees will continue to receive subsidies, based on guidance issued by the Labor Department.

The program was part of an economic stimulus bill in 2009, and was extended by Congress several times. For employees who were involuntarily terminated, it provided a federal subsidy for 65 percent of the COBRA premium for up to 15 months.
 

The last extension of the program applied to employees who were involuntarily terminated on or before May 31, 2010. Those individuals' 15 months of subsidies expired Aug. 31, 2011.

Certain circumstances will permit some individuals to continue receiving the subsidy, such as those who started COBRA coverage at a later date due to the terms of a severance agreement, the use of banked hours or other similar circumstance.

For instance, if an employee was terminated on May 31, 2010, but had a severance agreement continuing group health coverage for six months, then COBRA coverage would not have started until Dec. 1, 2010. That means the individual could continue receiving the subsidy until Feb. 29, 2012 (unless he or she becomes eligible for another group health plan or Medicare).

Employers should be aware of this potential continuation for COBRA recipients. In addition, plan administrators should confirm that they have gone back to using the pre-subsidy versions of the COBRA notices. Links to DOL model notices can be found at www.dol.gov/COBRA.