On December 19, 2009, President Obama signed into law an amendment to the American Recovery and Reinvestment Act of 2009 (“ARRA”), extending the government subsidy of premiums associated with health insurance continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).  The December amendment to ARRA extends the government’s 65% COBRA premium subsidy from nine to fifteen months for individuals who were involuntarily terminated from employment between September 1, 2008 and February 28, 2010.  Significant aspects of the COBRA-subsidy extension are summarized below.

Extension of COBRA Subsidies.  Under the amendment, individuals experiencing a qualifying event as a result of an involuntary termination from employment between September 1, 2008 through February 28, 2010 are eligible for subsidized coverage.  This eligibility period would have expired on December 31, 2009.

Maximum Coverage Period.  The amendment extends the maximum period of subsidized coverage to 15 months from the 9 months originally provided under ARRA.

More Notifications.  Group health plans are required to provide notification of the subsidy extension to all individuals eligible for the subsidy after October 31, 2009 within 60 days of enactment and to individuals who become eligible for the subsidy after the bill is enacted.

Retroactive Payments.  Individuals who lost their coverage as a result of not timely paying the December (or later) premiums are entitled to elect coverage retroactively by paying the premium within 60 days of enactment or, if later, within 30 days of receiving notification of the extension from the group health plan.  If someone remained on COBRA by paying the full rate in December (and later months), he or she is entitled to a refund under the existing ARRA refund rules.