Extension of the COBRA Premium Subsidy


On December 19, 2009, President Obama signed the Department of Defense Appropriations Act of 2010 (the Appropriations Act), that includes an extension of eligibility for the COBRA premium subsidy for an additional two months and extends the maximum period for receiving the subsidy for an additional six months. The Appropriations Act requires plan administrators to provide notice of the extension to eligible COBRA beneficiaries.

Under the American Recovery and Reinvestment Act of 2009 (ARRA), certain qualified beneficiaries who are eligible for COBRA continuation of health coverage may be eligible to pay 35% of the premium for a nine-month period following the date of a qualifying event, with the employer receiving a payroll tax credit equal to the remaining 65% of the premium. Under ARRA, a COBRA qualified beneficiary will be an assistance eligible individual (AEI) entitled to reduced premiums if...

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