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COBRA Subsidy Expires; Extension Seems Unlikely

June 24, 2010
The eligibility period required for certain individuals to receive a 65 percent premium subsidy to help pay for continuing health coverage, also known as COBRA, has been extended several times but will likely not be extended again.  Although Congress recently passed the Continuing Extension Act of 2010, extending the COBRA subsidy eligibility period to May 31, when addressing the matter after the Memorial Day break, the Senate decided to remove a further extension from pending legislation in order to save $7 billion.  This decision leaves many workers who were involuntarily terminated after May 31 and who desire to continue their employer-sponsored health care coverage to pay the full cost of COBRA.  Those who were involuntarily terminated on or prior to the expiration date and currently receive the COBRA subsidy may continue with the subsidized coverage, but will lose the benefit once they reach the maximum subsidy coverage period of 15 months. Should a decision to extend the COBRA subsidy occur later, AGC will provide an update and refer employers to appropriate compliance assistance tools, including model notices.  In the meantime, employers are encouraged to review notices sent to COBRA-eligible employees on or after June 1, 2010, to verify that they are not promised the 65 percent subsidy.  For additional information and questions regarding COBRA and the premium subsidy, contact the U.S. Department of Labor Employee Benefits Security Administration at 1-866-444-3272.
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