Has the EBSA Played Scrooge with the ARRA COBRA Subsidy??

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December 3, 2009

Yesterday the Employee Benefits Security Administration posted a new question and answer on its ARRA COBRA subsidy website, which could bring a big lump of coal to some holiday stockings. As you may remember, the COBRA premium subsidy is available to involuntarily terminated individuals: 1) whose termination occurred during the period from September 1, 2008 through December 31, 2009; 2) who are eligible for COBRA coverage during that period, and 3) who elect COBRA. Many understood these requirements to mean that an individual who is terminated during December 2009 is eligible for the subsidy, even though COBRA might not begin until January 1, 2010. This is often the case where coverage under the group health plan lasts through the month of termination.
The EBSA’s question involved an individual with an involuntary termination of employment no later than December 31, 2009, but with COBRA beginning on or after January 1, 2010. The EBSA’s answer was clear. Because the COBRA does not begin on or before December 31, 2009, the subsidy is not available. The subsidy requires that COBRA begin during the September 1, 2008 through December 31, 2009 period.
Many employer group health plans provide for coverage through the end of the month of termination, and COBRA then begins the first of the following month. For December 2009 involuntary terminations, such a plan design will mean that the COBRA subsidy is NOT available. While there is legislation pending in many forms which would extend the COBRA subsidy enacted through ARRA, as of today no such extension has been enacted.
If you have questions regarding the above, please contact Mary Ellen Schill, the author of this article, or any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

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