Tuesday, December 22, 2009

Government Expands COBRA Coverage and Subsidies

By Christopher S. Andre

As most employers know, COBRA is a federal law allowing terminated employees to continue to receive group health insurance coverage offered by their employers for up to 18 months. Historically, individuals have been required to pay the entire premium plus an administrative fee.

As part of the Federal Government's stimulus package enacted in February 2009, the Federal Government subsidized 65% of the COBRA premiums for employees terminated between September 1, 2008, through December 31, 2009, thereby reducing an employee's contribution from approximately $1100 per month to approximately $389 per month for a maximum of 9 months.

President Obama has now signed legislation included in a defense spending bill extending eligibility for subsidized COBRA coverage from December 31, 2009, to February 28, 2010, and expanding the subsidy from 9 months to 15 months.