Those who involuntarily lost their jobs from September 1, 2008 to May 31, 2010 are eligible (if they meet certain criteria) to pay a lower amount for COBRA coverage, only 35% of the full premium. The employer will then be reimbursed by the federal government in the form of a payroll tax credit for the remaining 65%. Individuals are eligible for this subsidy for a maximum period of 15 months.
In response to those who have 15-month COBRA subsidies expiring or soon to be expired, the Department of Labor has recently issued a fact sheetand new FAQs addressing issues to be aware of when the subsidy period expires. There has been no recent talk of Congress possibly extending the COBRA subsidy to anyone who involuntarily lost their job after May 31st. The 15-month subsidy periods have started expiring back in May 2010 and the last group will expire in August of 2011. After the COBRA subsidy expires, individuals will need to start paying the full COBRA premium instead of 35% for the remainder of the time they have their COBRA coverage. The maximum period of COBRA in most cases is 18 months, so many will have a three month period that they will need to pay the full premium.
The DOL’s fact sheet contains tips for those affected by the expiring subsidy, including a warning that plans are not required to send reminder notices that the subsidy period is ending. Individuals are encouraged to contact their employer if they have questions about their subsidy end dates or full premium amounts. The fact sheet also emphasizes the importance of paying the full COBRA premium for the remainder of months. Otherwise, coverage could be cancelled due to nonpayment.
The DOL also gives suggestions for other places to look for coverage, if the individual has already lost COBRA coverage because of their failure or inability to pay the full COBRA premium amount.
If you have former employees on COBRA who are currently eligible for the subsidy, be sure to confirm the date each person’s subsidy expires, so that you are collecting the correct amount of full premium.