COBRA Subsidy Extension Means More Work for Employers
In December of 2009, Congress and the President approved an extension and expansion of a COBRA premium subsidy law that was due to expire on December 31, 2009. The program now runs through February 28, 2010, rather than December 31, 2009, and the subsidy period is expanded from nine to 15 months. Additionally, there is no requirement that COBRA coverage begin by February 28, 2010, only that the COBRA qualifying event (involuntary termination of employment) occurs by February 28, 2010, and that the individual is eligible for COBRA coverage.
With this extension come new compliance obligations for employers. For example, employers must comply with new notice requirements regarding the extension that must be met quickly. As the United States Department of Labor outlines in its FAQs, plan administrators must provide, as part of the COBRA election notice materials, a General Notice to all qualified beneficiaries, not just covered employees, who experience a qualifying event at any time from September 1, 2008 through February 28, 2010, regardless of the type of qualifying event. For qualifying events occurring after the December 19, 2009 date of enactment, this notice must be provided within the normal timeframe for providing a COBRA election notice. Some beneficiaries will be entitled to multiple notices.
Employers will also need to calculate any overpayments for COBRA beneficiaries who may have paid their full premiums upon receiving notice that their eligibility for the pre-extension subsidy ran out. Upon calculation of the overpayments, employers will have to decide either to issue refund checks to the beneficiaries or to offset future COBRA premium payments by the amount of the overpayment.
For more information on the notice requirements, as well as additional facts regarding the COBRA subsidy extension in general, please visit:
http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html and
http://www.dol.gov/ebsa/newsroom/fscobrapremiumreduction.html.
As always, feel free to call the attorneys at Wright Penning & Beamer as well.
Dan A. Penning
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