Vision Payroll

August 31, 2011

Tip of the Week: COBRA Subsidy Not Ending Today According to the US Department of Labor

COBRA Subsidy Not Ending Today According to the US Department of Labor
COBRA Subsidy Not Ending Today According to the US Department of Labor
According to the US Department of Labor, some individuals will still be eligible to receive the COBRA premium reduction (subsidy) beyond August 31, 2011. It had been reported that the subsidy ended today.

ARRA Provided a COBRA Premium Reduction

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. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. Since August 31, 2011 is fifteen months after May 31, 2010, it had been incorrectly reported that the subsidy was ending

Severance Agreement Among Reasons for Extended Subsidy

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 even if their COBRA coverage did not start until a later date due to the terms of a severance arrangement, or the use of banked hours or other similar provision that delayed the start of their COBRA coverage. For example if 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, 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.

Contact Vision Payroll Today

Contact Vision Payroll if you have further questions on the COBRA subsidy.

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