Stopgap COBRA Subsidy Extension Signed into Law      

H.R. 4961 was signed into law on Tuesday and extends the last day of the eligibility period for the COBRA premium subsidy from February 28 to March 31.  The legislation also extends the subsidy eligibility to employees who experienced a reduction in hours on or after September 1, 2008, followed by involuntary termination during the period of March 2, 2010 through March 31, 2010, and who are otherwise assistance eligible individuals.  For such individuals who did not make (or who made and discontinued) an election of COBRA continuation on the basis of reduction of hours of employment, their involuntary termination of employment during the period of March 2 through March 31 should be treated as the qualifying event.  In any such case, however, the period of the individual's continuation coverage should be determined as if the reduction of hours were the qualifying event.

Individuals are not required to pay COBRA premiums for the time between their reduction of hours and their involuntary termination, and that time will not be counted as a break in coverage under HIPAA. Regardless, the subsidy will only apply to periods of coverage following the March 2 enactment date.

Group health plan administrators must provide a notice to individuals who experience a reduction of hours followed by involuntary termination during the given time frame, describing the provisions of this extension. The notice must be provided during the 60-day period beginning on the date of the individual's involuntary termination of employment.