Thursday, March 11, 2010

COBRA Subsidy Extended Again

The U.S. Government has once again extended the sixty-five percent (65%) federal COBRA subsidy under the American Recovery and Reinvestment Act ("ARRA") available to employees who have been involuntarily terminated from their employment. Signed into law on March 2 by President Obama, this "stop-gap" measure extended February 28, 2010 to March 31, 2010, the prior deadline. The measure also made other changes to the existing law, including (among other things): (a)providing that health plan participants who initially lose coverage due to a reduction in hours, but are later involuntarily terminated, will be eligible for the COBRA subsidy; (b) creating a new penalty of up to $110 per day for plan sponsors or health insurers that fail to comply Department of Labor ("DOL") determinations that an individual’s qualifying event was, in fact, an “involuntary termination”; and (c) protecting employers from inadvertently overstating their employment tax credits based on the COBRA subsidy. More information about this issue can be found on the DOL's website (