On December 2, 2009 the Department of Labor ("DOL") released clarifying guidance regarding eligibility for the American Reinvestment and Recovery Act of 2009 ("ARRA") COBRA premium subsidy (the "Subsidy"). Provided in a question and answer format, the new guidance discusses initial eligibility for the Subsidy and an assistance eligible individual's ("AEI's") ability to receive the Subsidy after December 31, 2009.
Congress' passage of ARRA created the Subsidy to assist those individuals who were involuntarily terminated but wished to continue group health plan benefits through COBRA coverage. ARRA defined an AEI as an individual who is eligible for COBRA coverage because of an involuntary termination from employment that occurred from September 1, 2008 through December 31, 2009. If an individual was determined to be an AEI and elected COBRA, ARRA dictated that the AEI's former employer (or insurer, as applicable) pay 65% of the AEI's portion of the COBRA premiums for up to nine months. As 2009 comes to a close, employers and potential AEIs have contacted the DOL with many questions regarding eligibility for the Subsidy and the DOL released this new guidance in response to these questions.
The guidance clarifies a tricky issue regarding initial eligibility for the Subsidy. For those employees (and their covered dependents) who are involuntarily terminated on or before December 31, 2009, but who are not qualified beneficiaries eligible for COBRA until on or after January 1, 2010, the DOL clarified that such individuals are not considered AEIs and do not meet the qualifications for the Subsidy. This clarification will affect those individuals who are terminated in December 2009 but whose group health plan coverage continues through the end of the month. Since these individuals are considered "active" participants in the group health plan through December 31, 2009 and are not eligible for COBRA until January 1, 2010, these individuals would not qualify as AEIs under the current law and are not eligible to receive the Subsidy. The DOL did note that there is pending legislation that could extend eligibility for the Subsidy, but Congress has not yet passed this legislation.
Further, the DOL clarified that if an individual qualifies as an AEI no later than December 31, 2009 and becomes eligible for COBRA no later than December 31, 2009, he or she is entitled to receive the full nine months of the Subsidy as long as they remain eligible. For example, if an AEI elected COBRA on November 1, 2009, the AEI would be entitled nine months of the Subsidy through July 21, 2010, so long as they remained eligible.
For further information on the Subsidy or ARRA, please see our previous EmployNews articles on these topics by clicking here and here.