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New COBRA extension includes some twists

Jennifer Azara
by Jennifer Azara
March 12, 2010
  • Benefits
2 minute read
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Wellness

They did it again! Congress just passed yet another extension to the COBRA subsidy … and then some. Here’s what you need to know this time.

They missed the deadline by a couple of days, but Congress still managed to extend how long your company will have to offer COBRA coverage to recently departed employees.

Check out this rundown of what this latest extension means to you:

  1. Another month for subsidy eligibility. Congress didn’t get the extension through before the last one expired on Feb. 28, but employees will still be eligible all the way through the end of the month. The subsidy extension now covers the entire period from Sept. 1, 2008 through March 31, 2010.
  2. New qualifying events. You’ll probably have to go back all the way to that initial effective date to check for a new group of employees: ones whose hours your company reduced. The new extension broadens the definition of a qualifying event to include employees whose hours were reduced at any time during the eligibility period and who wind up being terminated on or after March 2, 2010 (the day the extension was passed). Note: There are also changes to the election period and the notice you must give affected employees to go with this change.
  3. A new safety net for employers. There’s even more reason to make sure you have the paper trail to support any decisions your company regarding an employee’s eligibility for the COBRA subsidy. Assuming you have the proper documentation you can be eligible for reimbursement of the premium assistance your company pays if you determine the employee was involuntarily terminated.
  4. New penalties. But there’s no room for error in complying with these new rules. There’s a new $110 per day penalty for any plan sponsor who fails to comply with a determination that an employee was eligible within 10 days of receiving it.
Jennifer Azara
Jennifer Azara
Jennifer, a member of the CFO Daily News staff, has covered business and finance for more than 22 years. She has written for CFOs, credit and collections professionals and accounts payable practitioners and has spoken at industry conferences on sales and use tax compliance.

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