April 2010

Update on COBRA Premium Subsidy Extension of 2010

On March 2, 2010, President Barack Obama signed legislation for a second extension of the federal government’s COBRA premium subsidy program, through The Temporary Extension Act of 2010. In that law, there were also changes related to reduction in hours as a qualifying event.

• an employee is moved from full-time status to part-time status
• an employee is temporarily laid off
• there is a strike/lock-out
• an employee takes a leave of absence.

If one of the situations above occurs, but the employee is not terminated, the member would qualify for COBRA coverage. However, the employee would not qualify for the subsidy, even if there was a subsequent involuntary termination of employment.

Under the new law, if work hours are reduced from the dates of Sept. 1, 2008 – Mar. 31, 2010, AND an employee was involuntary terminated between the dates of Mar. 1, 2010 – Mar. 31, 2010, the subsidy may apply. 

Key point:  If an employee had previously elected COBRA due to a reduction in hours and continued COBRA through the date of a subsequent involuntary termination of employment, the employee is not entitled to any period of subsidy. 

For people who had not previously elected COBRA due to a reduction in hours between the dates of Sept. 1, 2008 - Mar. 31, 2010, and experienced a subsequent involuntary termination of employment between the dates of Mar. 1, 2010 - Mar. 31, 2010, there is a new opportunity for the member to enroll in COBRA and obtain subsidy. BlueCross will identify these situations and provide the proper notice for these qualified individuals.

1. For purposes of measuring the COBRA period, it begins on the date of the reduction in hours.

2. For purposes of measuring the COBRA subsidy period, it begins on the date of the involuntary loss of employment and continues until the end of the COBRA continuation period.  This means it’s possible a member would get a lesser period of actual COBRA coverage than the full COBRA continuation period and less than 15 months of subsidy.

3. Under this law, COBRA premiums are not due for the period of time between the reduction of hours and the date of the involuntary termination of employment and there is no retroactive COBRA coverage.