COBRA Subsidy Extension

Business Survival Tip
Episode 23
By Carl Kleimann
December 30, 2009

Full Interview transcript

Carl: Hello business owners this is Carl Kleimann from Odyssey One Source with another Business Survival Tip. Days before Christmas, President Obama signed a bill extending the federal government’s subsidy of COBRA premiums for an additional six months. This subsidy was part of the original Stimulus bill passed in February of 2009. That bill paid 65 percent of the COBRA premium for up to nine months for employees who were involuntarily separated from employment between September 1, 2008 and December 31, 2009.

The recent extension does two things. First, it extends the eligibility period for an additional two months, through February 28, 2010. Employees who are involuntarily separated from employment in January and February of 2010 will now be eligible for the subsidy. Second, it extends the number of months, from 9 to 15, that the subsidy is available. COBRA participants who have exhausted their nine months of subsidy will now receive an additional six months. In fact, anyone who used up their subsidy prior to the end of December, and opted to discontinue COBRA coverage at the full cost, must be given the opportunity to retroactively re-enroll based on the extended subsidy.

So here are some steps that employers should take in order to comply with newly enacted extension:

First of all, notify all current COBRA participants of the 6 month subsidy extension.
Then notify any COBRA participant that exhausted his or her 9 month subsidy and cancelled COBRA coverage that they are now entitled to retroactively resume COBRA. If they chose to continue COBRA coverage at the full cost, you must issue them a refund equal to the subsidy amount.
And finally, going forward, notify all employees that are involuntarily separated through February 28, 2010 that they are eligible for the extended subsidy.

If you outsource your COBRA administration to a third party vendor, that vendor will likely assist you in making the required notices.

I am Carl Kleimann and this has been another Business Survival Tip by Odyssey One Source, ranked as the number one Professional Employer Organization three years running by the Black Book of Outsourcing.
For more information on this and other issues affecting employers, please visit odysseyonesource.com.