On April 15, 2010, President Obama signed the Continuing Extension Act of 2010 extending eligibility for the ARRA premium subsidy through May 31, 2010.  Applicable to both COBRA and NC State Continuation, this latest extension is effective immediately and is retroactive to April 1, 2010.

Eligibility Extended, COBRA Coverage Remains Same
As discussed in the Compliance Alerts dated December 22, 2009, and March 8, 2010, subsidy eligibility was previously extended to cover involuntarily-terminated employees through February 28, 2010 and March 31, 2010 respectively. However, this latest extension will allow employees who were terminated involuntarily through May 31 to claim subsidy benefits.

Employers also should note that the Act does NOT extend the period of premium reduction or the COBRA coverage period. The period of premium reduction remains 15 months for eligible individuals and the maximum period of COBRA coverage is 18 months from the original qualifying event.

Two Subsidy-Eligible Qualifying Events
There are two types of qualifying events that will make an individual subsidy-eligible:

1. An involuntary termination of employment occurring between September 1, 2008, and May 31, 2010; and
   
2. A reduction of hours resulting in a loss of coverage occurring between September 1, 2008, and May 31, 2010, that is followed by an involuntary termination of employment on or after March 2, 2010, and on or before May 31, 2010.

DOL Subsidy Information
The Department of Labor has not yet released updated COBRA notices for employers who self-administer COBRA to comply with the most recent extension. However, the DOL has released an updated Premium Reduction Fact Sheet that employers may find helpful.

When the DOL updates its model notices, they will be posted on the DOL website.

Additional Extensions on the Horizon?
The Senate is considering a bill (HR 4213) that would extend eligibility for the subsidy through December 31, 2010.  If this bill were passed, it would make individuals involuntarily terminated on or before December 31, 2010, subsidy-eligible.

HCW will continue to keep you updated through Compliance Alerts regarding any laws amending the subsidy provisions. In the meantime, you can view the provisions of the Continuing Extension Act of 2010 from the DOL’s EBSA website. If you have any questions about the recent changes to the premium subsidy, please contact our office at 919-403-1986.