Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

The extension is retroactive for those who lost COBRA coverage because they stopped paying the premiums due to the expiration of their subsidy.  By way of example, someone who was laid off and began receiving their subsidy in March 1, 2009 was subsidy eligible through November 30, 2009.  If that individual did not pay his or her December 2009 premium because the subsidy expired, that person will have an opportunity to pay the lower amount to receive retroactive continuation coverage until May 31, 2010.  To obtain this retroactive extension, that individual must pay their share (35%) of the past premium cost by the later of February 17, 2010 or 30 days after the required notice is given by the plan administrator.  Any individuals who retained COBRA coverage after exhausting the subsidy must either be reimbursed or credited for the COBRA subsidy amounts that they would have been entitled to.

Plan administrators must be sure to update election notices to ensure they provide updated premium reduction information.  Furthermore, the new legislation mandates that individuals who have already been provided a COBRA election notice without the updated information must be notified of the changes in the following manner:

• All previously eligible individuals must be notified by February 17, 2010. 
• Individuals that have been involuntarily terminated on or after October 31, 2009 and lost health coverage must be notified within normal timeframes. 
• Individuals whose 9-month subsidy period ended before December 19, 2009, and are now eligible for the subsidy period extension must be notified within 60 days after the date on which the 9-month subsidy period ended.

Both the House and Senate bills would extend the COBRA subsidy, but the terms vary.

The “Extended COBRA Continuation Protection Act of 2009,” House bill (H.R. 3930),  was introduced  on October 23 by Representative Joe Sestak (D-Pa).  It would extend for six months the maximum COBRA period for individuals whose coverage was the result of a termination or reduction in hours occurring on or after April 1, 2008 and before January 1, 2010.  The bill would also extend the eligibility period for the ARRA COBRA subsidy from December 31, 2009 to June 30, 2010, and would extend the maximum period of ARRA premium assistance from 9 to 15 months.  The House bill has been referred to the Committees on Education and Labor, Energy and Commerce, and Ways and Means.

The Senate version of the bill, the “COBRA Subsidy Extension and Enhancement Act,” (S. 2730) was introduced on November 4 by sponsors Senators Robert Casey (D-Pa), and Sherrod Brown (D-Ohio).  The bill also has the support of Senators Al Franken (D-Minn.),  Arlen Specter (D-Pa),   Robert Mendez (D-N.J.), and Sheldon Whitehouse (D-R.I.).   The Senate bill contains some of the same features as the House version, such as extending the eligibility period for six months until June 30, 2010, and extending the subsidy period from 9 to 15 months.  In addition, however, the Senate bill extends subsidy eligibility to employees who lose their health insurance because of a reduction in working hours (as opposed to complete loss of employment), and to employees who are eligible for retiree health coverage.  Another noteworthy aspect of the Senate bill is an increase in the subsidy amount, from 65% of the cost of the COBRA premium to 75%.  The Senate bill has been referred to the Committee on Health, Education, Labor and Pensions. 

Some version of the COBRA subsidy extension is expected to pass.  Employers should stay alert to these legislative developments and should be prepared to revise existing COBRA notices.  COBRA participants will need to be informed of all changes, deadlines and expirations.  The Department of Labor provides information about COBRA and COBRA Model Notices to employers.  However, specific legal advice from counsel should be obtained as to how best to implement any legislative changes.