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Eligibility for COBRA Subsidy Under ARRA Expires

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As most employers and employees know, COBRA is the federal law that allows certain individuals to extend employer-provided group health coverage if they would otherwise lose the coverage due to certain events such as loss of a job. The premiums for continuing coverage are borne by the employee or other person electing coverage, and can be quite costly.

The American Recovery and Reinvestment Act of 2009 (“ARRA”), part of the economic stimulus package, temporarily reduces the premium for COBRA or comparable State continuation coverage for eligible individuals. In a nutshell, the individual electing coverage had to pay 35% of the premium and the employer was responsible for the remaining 65%. Subsequent Acts extended both the period to qualify for the COBRA premium reduction, as well as the maximum period for receiving the subsidy (from nine to 15 months). The last extension just recently expired on March 31, 2010.

Thus, individuals who are eligible for COBRA coverage because of their own or a family member's involuntary termination from employment that occurred during the period from September 1, 2008 through March 31, 2010 and who elect COBRA may be eligible to pay a reduced premium. Eligible individuals pay only 35% of the premium for COBRA coverage under their plans for up to 15 months. This premium reduction is generally available for continuation coverage under the Federal COBRA provisions, as well as for group health insurance coverage under comparable State continuation coverage laws.