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COBRA Subsidy Ends as of May 31, 2010
Last Updated: June 7, 2010 The COBRA subsidy, which
affords Assistance Eligible Individuals
(AEIs) the opportunity to pay only 35% of
their COBRA premiums for up to 15 months,
was not extended by Congress before its
Memorial Day recess. For many employers,
this came as quite a surprise. Up until late
Friday night, it appeared that Congress was
going to extend the subsidy for employees
and dependents whose COBRA qualifying event
took place through November 30, 2010. While
not impacting individuals already receiving
the subsidy, as things stand now, no one can
become subsidy eligible after May 31, 2010. As you may know from our
earlier emails, this subsidy applied to
employees and dependents whose COBRA
qualifying event was either the employee's
involuntary termination that occurred
between September 1, 2008 and May 31, 2010;
or was the employee's reduction in hours
between September 1, 2008 that was followed
by the employee's involuntary termination
between March 2, 2010 and May 31, 2010. As this legislation has
been subject to a number of extensions, most
of which were retroactive in nature, we
remain unsure of the subsidy's future. We
understand that Congress plans to reconsider
extending the subsidy when it reconvenes on
June 7, 2010. In the meantime, employers
should continue to administer the subsidy
for individuals who qualified prior to the
May 31, 2010 sunset date. For individuals
who terminated on or after June 1, 2010,
COBRA notices should not contain language
about the subsidy's availability. If the
subsidy is extended and made retroactive,
those individuals will receive an updated
COBRA notice. If your company terminated
an employee on June 1 with the anticipation
of the subsidy still being in place, we urge
you to give us a call. We have been in
contact with the federal Department of Labor
and can share the information we have
learned from them.
For background about the subsidy, please see
our previous article
COBRA Subsidy and Unemployment Benefits
Extended by the CEA.
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