*By Patrick J. Hoban
On March 2, 2010, President Obama signed H.R. 4691 – the “Temporary
Extension Act of 2010” (the “Act”) into law. The Bill, which became
Public Law 111-144, provides short-term extensions of several
authorities, including those related to: (1) unemployment compensation;
(2) ARRA COBRA premium subsidies; (3) Medicare physician payments; (4)
Medicare therapy caps; (5) surface transportation programs; (6) flood
insurance programs; (7) retransmission of television broadcasts; (8)
Federal poverty guidelines; and (9) Small Business Administration loan
guarantees.
In addition to extending the ARRA COBRA premium subsidies to
individuals who become eligible through March 31, 2010, the Act
clarifies the eligibility of individuals who lose group health insurance
coverage due to the reduction in hours of an employee. The Act
specifies that the loss of group coverage due to a reduction in hours
only triggers eligibility for COBRA continuation coverage but not the
ARRA COBRA subsidy. However, an individual who loses group coverage due
to a reduction in hours and is later involuntarily terminated is
entitled to elect ARRA COBRA coverage at the time of his or her
involuntary termination.
Importantly, per the “clarification” set forth in the Act and
as confirmed by the Employee Benefits Security Administration (“EBSA”),
the total period for COBRA continuation coverage eligibility (with or
without the ARRA premium subsidy) initially extends for 18 months from
the triggering event (i.e., loss of group coverage due to an
hours reduction or termination of employment). Currently, the ARRA
COBRA premium subsidy extends for 15 months from the date of involuntary
termination. However, EBSA has confirmed that the ARRA COBRA premium
subsidy does not extend the period of COBRA continuation entitlement.
Thus, when a covered individual loses group coverage due to a reduction
in hours, the clock starts ticking on his or her COBRA continuation
eligibility. If that employee is later involuntarily terminated, he or
she will be entitled to elect the ARRA COBRA premium subsidy but that
election will not extend the period of COBRA continuation coverage to
which he or she is entitled.
Although the Act only extended the ARRA COBRA premium subsidy
to eligible individuals through March 31, 2010, there are currently two
bills pending in the U.S. Congress that would extend the premium
subsidies through June 30, 2010. Employers should expect Congress to
take further action on COBRA within the month.
*Patrick J. Hoban, practices in all
areas of labor and employment law, with a focus on private and public
sector labor law. If you have any questions about this legislation or
other ARRA COBRA or COBRA issues, contact Pat Hoban at pjh@zrlaw.com or 216.696.4441.
