COBRA Subsidy Is Extended Again
On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (the "Act"), which extends COBRA subsidy eligibility through March 31, 2010. As we wrote in our January 10, 2010 post, the COBRA subsidy provides that assistance eligible individuals are responsible for only 35% of their COBRA premiums during the subsidy period and employers are responsible for the remaining 65% of the premium, but receive a payroll tax credit for the cost. The COBRA subsidy was originally set to expire on December 31, 2009, but was extended to February 28, 2010. The Act is a stop gap measure while Congress considers legislation that could further extend the COBRA subsidy through December 31, 2010.
Under the Act, employees who are involuntarily terminated between March 1, 2010 and March 31, 2010, are eligible for the COBRA subsidy. Additionally, the Act expands eligibility to cover individuals who were subjected to a reduction of hours between September 1, 2008 and March 31, 2010, followed by an involuntary termination occurring between March 2, 2010 and March 31, 2010. Such individuals are eligible for the COBRA subsidy regardless of whether they elected COBRA coverage at the time of their reduction in hours. The Act also provides further guidance to employers regarding their determination as to whether an employee’s termination was involuntary.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.