COBRA Subsidy Extension: EBSA And IRS Provide Guidance

Originally published January 29, 2010

New guidance from the Employee Benefits Security Administration regarding the COBRA subsidy extension includes revised employee notices, important information about participant eligibility and the mechanics for recovery of the employer-paid premiums.

The COBRA subsidy, which was established by the American Recovery and Reinvestment Act of 2009, enables "assistance eligible individuals" (AEIs) to pay only 35% of their COBRA premiums for health coverage continuation, with the remaining 65% being paid by the coverage provider subject to reimbursement through a tax credit. AEIs were initially limited to employees (and their beneficiaries) who became eligible for COBRA (or comparable state law, e.g., Massachusetts' "mini-COBRA") to an involuntary separation from service between September 1, 2008 and December 31, 2009. The Department of Defense Appropriations Act, 2010 (2010 DODA) extended this period to include involuntary service