Foster Swift Employment, Labor & Benefits E-News
December 23, 2009
On December 19, 2009, President Obama signed the Department of Defense Appropriations Act (DDAA) which contains some major expansions and extensions relating to COBRA premium assistance.
Former Law - ARRA: The American Recovery and Reinvestment Act of 2009 provided for a 65% reduction in the premiums otherwise payable by certain involuntarily terminated individuals and their families who became eligible for COBRA coverage during the period beginning September 1, 2008 and ending on December 31, 2009. Individuals were eligible for this premium reduction for a period of up to nine months.
New Law - DDAA: DDAA makes some significant changes to COBRA premium assistance. The new legislation extends the deadline for individuals who become eligible for the COBRA premium subsidy from December 31, 2009 to February 28, 2010. DDAA also extends the eligibility period for the premium reduction from nine months to fifteen months.
In addition, DDAA allows an individual to retroactively elect COBRA continuation coverage if the person (1) qualified for COBRA immediately prior to the "transition period" and (2) pays any unpaid premiums within 60 days after the enactment of DDAA, or 30 days after receiving notice from the Plan Administrator, whichever is later. The transition period is any period of coverage preceding the date of the enactment of DDAA.
New Notice Requirements: DDAA has new notification requirements. If someone is eligible for COBRA premium assistance or experiences a qualifying event (involuntary termination of employment) on or after October 31, 2009, the Plan Administrator must provide information to individuals regarding the changes made by DDAA. This notice must be provided within 60 days after the enactment of DDAA
Individuals who lost premium assistance are also entitled to notice of the DDAA changes. If an assistance-eligible individual failed to pay for any period of coverage during the transition period, the Plan Administrator must send, within 60 days after the beginning of the individual's transition period, information regarding the changes made by DDAA, including the ability to make retroactive premium payments in order to maintain COBRA coverage.
Please contact your employee benefits counsel at Foster Swift for additional information about the extension of COBRA premium assistance.