Congress and the President brought a little bit of holiday cheer to unemployed Americans struggling to pay for health insurance.  As predicted by this blog in February, President Obama signed the Department of Defense Appropriations Act of 2010 yesterday which extends the federal COBRA health coverage subsidy for involuntarily terminated employees an additional 6 months.  Readers will recall that the COBRA subsidy allows laid off employees to continue their employer’s group health insurance provided they pay 35% of the monthly premium instead of the 102% that many employees had to pay in the past.

Now, employees involuntarily terminated from their employment will have the COBRA subsidy available to them for up to 15 months.  For example, if an individual was  laid off on July 15, 2009 with their health coverage ending on July 31^st, this individual is eligible for a COBRA subsidy from the period of August 2009 through October 31, 2010.

Under the new legislation, employees who experience a “qualifying event” up through February 28, 2010 will be eligible for the 15 month COBRA subsidy.  Further, the new legislation requires employers to notify former employees who were eligible for the COBRA subsidy on or after October 31, 2009, that they may continue to pay for their health insurance at subsidized rates for up to 15 months,  and that they may reinstate their COBRA coverage if they had stopped paying their COBRA premiums after their subsidy expired.

Putting aside the cost, the COBRA subsidy has been an unqualified success.  According to Hewitt & Associates,  only 19% of eligible employees made use of their COBRA rights before the ARRA.  Now, that figure rests at 38%.   Finally, we expect the Department of Labor and the IRS to have model notices ready for employers before the end of the year.

Last 5 posts by Ross Molho

• Employers Who Conciliate in Glass Houses Shouldn’t Throw Stones - December 29th, 2009
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• Department of Labor Publishes Model COBRA Notices - March 19th, 2009

Tags: Employment Law, Labor & Employment

This entry was posted on Tuesday, December 22nd, 2009 at 4:55 pm and is filed under Business Counseling, Labor & Employment. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.