COBRA Subsidy to ExpireThe American Recovery and Reinvestment Act of 2009 (ARRA) created rights to COBRA premium assistance for employees (and their families) who were involuntarily terminated. The original program provided assistance to employees involuntarily terminated between September 1, 2008 and December 31, 2009. As you will recall, Congress extended the program several times. The last extension extended the subsidy to those involuntarily terminated through May 31, 2010. Under the program, certain assistance eligible individuals were eligible for a premium subsidy for periods of coverage beginning on or after February 17, 2009. These individuals were only required to pay 35% of the COBRA premium and the employer (or, in some cases, the plan or insurer) would then be reimbursed by the federal government for the remaining 65% of the COBRA premium, through a credit or refund of an overpayment of payroll taxes. The premium subsidy was available for up to 15 months of the individual’s maximum coverage period.
For employees who were involuntarily terminated in May 2010 and have been unemployed since, their 15 months of COBRA premium subsidies will expire at the end of August.
As you are probably aware, the subsidy has had a dramatic effect on COBRA enrollment. One recent study found that the amount of people choosing COBRA roughly doubled after the subsidy was available. At this time, it is unlikely that the subsidy will be renewed.