AIMBlog_Logo_Resized

Confused about the COBRA Subsidy? Here's What You Need to Know

Posted by Erica Murphy on May 3, 2010 1:24:00 PM

Three extensions of the federal COBRA subsidy program, all of them short term and two of them retroactive, have prompted many Massachusetts HR professionals to ask AIM for simple, plain-language guidance for complying with the law and ensuring that the right notices go out to the right people at the right time.

Consider it done.

The U.S. Department of Labor (DOL) released updated model notices on April 27 reflecting changes to the COBRA subsidy program under the recently enacted Continuing Extension Act of 2010 (CEA). 

Under CEA, individuals who lose health insurance coverage due to an involuntary termination between April 1 and May 31 are now potentially eligible for the 65 percent federal subsidy of COBRA premiums.  Prior to CEA's enactment, employees involuntarily terminated after March 31, 2010 would have been ineligible for the subsidy. 

CEA defines an assistance eligible individual (AEI) as the employee or other qualified beneficiary who timely elects COBRA coverage following a qualifying event related to an involuntary termination of employment that occurs at any point from:

  • September 1, 2008 through May 31, 2010; or
  • March 2, 2010 through May 31, 2010 if:
  1. the involuntary termination follows a qualifying event that was a reduction of hours; and
  2. the reduction of hours occurred at any time from September 1, 2008 through May 31, 2010.

The DOL has issued model notices that plan administrators may use to describe the premium subsidies for people who may qualify.  Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy legal notice provisions.  AIM members may access these model notices, notated with practical clarifications, on the AIM Online Resource Center.  These are model notices only, and may be modified to meet each employer's needs.

Please Continue Reading

Topics: Associated Industries of Massachusetts, AIM, COBRA Subsidy

Subscribe to our blog

Posts by popularity

Browse by Tag