COBRA Premium Subsidy Could Run Past 08/31: DoL

According to an FAQ posted on the Employee Benefits Security Administration (EBSA) website, the American Recovery and Reinvestment Act (ARRA) provided a COBRA premium reduction for eligible individuals who were involuntarily terminated from employment through the end of May 2010.  The FAQ notes that, due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare.

Now, for most individuals, this meant that the subsidy would not be available after August 31, 2011, but the EBSA FAQ cautions that the subsidy could extend beyond that date if an individual’s COBRA coverage started later than May 31, 2010, due to the terms of a severance arrangement, banked hours, or other similar provision that delayed the start of COBRA coverage.  As an example, the FAQ notes a situation where an individual was involuntarily terminated on  May 31, 2010 and due to the terms of a severance agreement their COBRA coverage did not start until December 1, 2010.  In that situation, they would still be eligible for the full 15 months of subsidy through February 29, 2012 as long as they are not eligible for another group health plan or Medicare, according to the FAQ.  

The FAQ explains that individuals who believe they have been incorrectly denied the subsidy may request the Employee Benefits Security Administration to review their denial and issue a determination within 15 business days.

The application to request a review is available at http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreduction.html.