Nearly one year ago, the American Recovery and Reinvestment Act (ARRA) introduced COBRA subsidy provisions which enabled qualified individuals to pay only a fraction of COBRA premiums in order to retain health insurance after losing employment. (See our previous article: Recent Changes to COBRA Require Immediate Attention)

The subsidy provisions were scheduled to expire on December 31, 2009. However, the Fiscal Year 2010 Defense Appropriations Act, signed into law in late 2009, extends the eligibility period for the COBRA premium reduction for an additional two months, through February 28, 2010. This means that an individual who loses his or her job through no fault of their own between September 1, 2008 and February 28, 2010 may be eligible for the subsidy.

The Appropriations Act also extends the maximum period for receiving the subsidy from 9 months to 15 months. Individuals who have already exhausted their 9 months of subsidy eligibility will have up to an additional 6 months to take advantage of the subsidy. Ordinary COBRA limitations still apply and the subsidy cannot be used once the maximum months of CORBA coverage have been exhausted.

Finally, individuals who reached the end of the reduced premium period before the legislation extended it to 15 months will have an extension of their grace period to pay the reduced premium. To continue their coverage they must pay the 35% of premium costs by February 17, 2010, or, if later, 30 days after notice of the extension is provided by their plan administrator. This provision should enable individuals who have discontinued COBRA coverage due to premium costs to continue coverage by utilizing the subsidy.

More information about the COBRA subsidy provisions and extension can be found at www.dol.gov/cobra or by contacting the labor and employment attorneys at Bingham McHale.