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Obama signs COBRA subsidy extension; workers—and HR—breathe easier

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in Employee Benefits Program,HR Management,Human Resources

Just in time for the holidays, President Obama on Dec. 21 signed legislation to extend the government’s popular 65% subsidy of COBRA benefits. Laid-off workers are breathing a little easier—and so are HR pros, who would have had to untangle a logistical knot if the extension hadn’t been enacted.

The subsidies, which helped make continuation health care coverage more affordable for involuntarily terminated workers, were set to expire on Dec. 31. Under the extension—bundled into the annual Department of Defense appropriation—most eligible workers will be able to benefit from the subsidies through Feb. 28, 2010.

COBRA—the Consolidated Omnibus Budget Reconciliation Act—allows workers to stay on their employers’ health insurance plans after they’ve been terminated if they keep up the premium payments. The 65% subsidies were originally enacted in February as part of the economic stimulus law known as the American Recovery and Reinvestment Act.

The legislation Obama signed on Monday:

  • Expands the maximum subsidy period from nine months to 15 months. It includes people currently receiving the subsidy.
  • Extends the qualifying time during which workers must have been laid off. The previous cut-off was Dec. 31; now it’s extended through Feb. 28, 2010.
  • Closes a COBRA coverage hole that would have opened if the legislation hadn’t been enacted. Previously, if workers had been laid off in December 2009 but weren’t eligible for COBRA coverage until January 2010, they wouldn’t have been eligible for the subsidies at all. Now they are.
  • Extends coverage for people who had already used up nine months of subsidy eligibility under the original legislation. Now they qualify for the subsidies if they retroactively pay back for COBRA coverage during the lapsed months.
  • Requires plan administrators to notify eligible former employees of the subsidies’ availability.

For more information on how to do so, visit the Department of Labor’s COBRA web site. The site also provides instructions on how employers can claim the tax credit associated with the COBRA subsidy, along with the necessary forms.

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