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Your Legal Corner - Client Alert Blog

65% COBRA Subsidy Extended Again Through May 31, 2010

Written By: Melissa C. Marsh, Esq., California Attorney, April 2010 Add to Favorites
UPDATE 4-15-2010:
65% COBRA subsidy for up to 15 months extended again through May 31, 2010.

In Mid December of 2009, President Obama signed the 2010 Defense Appropriations Bill, which included an extension of the 65% COBRA Subsidy provision originally enacted last February in the American Recovery and Reinvestment Act of 2009 ("Stimulus Bill"). The new law affects the COBRA subsidy as follows:

  1. Extends the 65% COBRA subsidy to individuals who were involuntarily terminated and who lost group health insurance coverage before December 31, 2009 to February 28, 2010. So long as the employee is terminated before 2-28-2010 (now May 31, 2010), the employee will be entitled to the 65% COBRA subsidy effectively reducing their COBRA health insurance premium to 35% of the cost of coverage. Employees who receive a notice of termination before February 28, 2010 (Now May 31, 2010), need not actually be eligible for COBRA to receive the 15 month subsidy, they just have to have been involuntarily terminated by that date.
  2. Gives individuals whose subsidized COBRA coverage expired, 60 days from the date of enactment (or 30 days after the employer provides written notice of the employee’s eligibility for the extended COBRA subsidy, whichever is later) to retroactively get back their subsidized COBRA coverage. To do so, the former employer who opted to cancel coverage must pay the 35% subsidized premium amount to reinstate the coverage. If the former employer paid the full premium for any period after October 31, 2009, the "overpayment" must be refunded or credited towards future coverage.
  3. Requires administrators of group health plans to provide current and former employees entitled to COBRA benefits written notice of the new 15-month COBRA premium subsidy and the foregoing amendments.
  4. Extends the maximum subsidy period for an additional 6 months from 9 months to a total of 15 months.
The new legislation also permits employers to either issue refund checks for beneficiaries who "overpaid" their COBRA premiums by paying unsubsidized premiums but who are now eligible for retroactive subsidized coverage, or to offset future COBRA premiums by paying those premiums on behalf of the affected former employees.

Tags: COBRA subsidy
Posted In: Business Law Bulletin  Corporate Client Bulletin  Employment Law News 

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.