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2010 DOD amendment

As part of our ongoing effort to provide accurate, timely information, we have created this overview to help you understand the recent changes to the COBRA subsidy under the American Recovery and Reinvestment Act of 2009 (ARRA). This overview affects the subsidy for both COBRA and mini-COBRA participants. It is provided for your information only and does not constitute legal advice. If you need legal advice, please consult your own legal counsel.

As we previously informed you, ARRA, which was enacted on February 17, 2009, provides a subsidy of COBRA and mini-COBRA premiums for employees involuntarily terminated from employment between September 1, 2008 and December 31, 2009. These "assistance eligible individuals" (AEIs) are only required to pay 35 percent of their COBRA or mini-COBRA premiums for a period of up to 9 months. The remaining 65 percent of the premiums are to be recovered by credits against payroll taxes paid by employers or multi-employer plans for COBRA premiums, and by insurers for mini-COBRA premiums.

On December 19, 2009, ARRA was amended by the Department of Defense Appropriations Act, 2010 (2010 DOD) to:

  • Extend the duration of the COBRA premium subsidy from 9 months to 15 months.

  • Extend the eligibility period for the COBRA premium subsidy for two additional months. This will make the subsidy available to individuals who have an involuntary termination of employment through February 28, 2010.

COBRA Accounts: Action Required
The 2010 DOD Act requires employers to provide notice of the extension of the COBRA premium subsidy to the following categories of individuals:

  • All individuals who are currently AEIs must be notified by February 17, 2010;

  • All individuals who experienced a termination of employment on or after October 31, 2009 and who lose health coverage, must be notified within the normal time frames for providing COBRA continuation of coverage notices; and

  • All AEIs who are in a "transition period" must be notified within 60 days of the first day of the transition period. (The "transition period" begins immediately after the end of the nine months of premium reduction originally in effect under ARRA, as long as those nine months ended before December 19, 2009. The premium reduction provisions of the 2010 DOD Act would now apply during this period due to the extension from 9 to 15 months.)

We recently notified certain accounts of this information in a detailed letter:

Mini-COBRA Accounts: Action Required
The 2010 DOD Act also requires that individuals be notified of the extension of the mini-COBRA premium subsidy. Time frame requirements for notices vary depending on the affected individuals. Please note that under the terms of our Premium Account Agreement, employers are required to send the notices to affected individuals.

To assist employers in meeting the notice requirements, we recently issued a letter and have posted the letter and related documents below:

 

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