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Employment Resources


By March 1, 2010No Comments

In late December 2009, President Obama signed into law changes to the COBRA premium subsidy law that previously was set to expire on December 31, 2009. The extension brings added compliance obligations for employers, as the program has been extended two months through February 28, 2010, the subsidy period is expanded by 6 months to 15 months total and separate notice requirements apply.

The American Recovery and Reinvestment Act of 2009 previously established a law under which “assistance-eligible individuals� (AEIs) could receive a 65% COBRA premium subsidy for up to nine months from their continuation effective date. Under the original legislation, an AEI was defined as any COBRA qualified beneficiary who elected COBRA coverage and: (1) Lost group health coverage as a result of an involuntary employment termination; and (2) had a qualifying event between September 1, 2008, and December 31, 2009. The Act included various new administrative requirements for employers, many of which were required within a short time period after ARRA was enacted.

Here are the key provisions of the new COBRA subsidy extension:

  1. The maximum subsidy period increases from nine to15 months.
  2. The subsidy eligibility period is extended to February 28, 2010 (previously December 31, 2009).
  3. AEIs who previously had reached the end of their original premium reduction period before the extension was passed will have additional time to pay their premiums to continue coverage. They must pay the 35% of total premium costs by the later of February 17, 2010, 30 days after notice is provided by their plan administrator, or the end of the otherwise applicable payment grace period.
  4. AEIs who paid the full COBRA premium after their original subsidy period expired are eligible for reimbursement or crediting of excess premiums paid.
  5. Plan administrators must provide notice of the subsidy extension by February 17, 2010 to those individuals who were AEIs on or after October 31, 2009.
  6. Additional notices must also be provided to AEIs who are eligible to make retroactive premium payments at the subsidized rate and those entitled to premium reimbursement.