Important 2010 changes to COBRA

The American Recovery and Reinvestment Act (ARRA) was signed by President Obama on February 17, 2009 with an extension of the legislation passing on December 21, 2009 , again on March 2, 2010 , and most recently on April 16, 2010.  The legislation allows for COBRA premiums to be subsidized for employees that are/were laid off between September 1, 2008 and May 31, 2010.  The subsidy is 65% and allowed for up to fifteen months or the end of COBRA eligibility, whichever is first.

These are a few of the key points:

  • The program began March 1, 2009. 
  • FSA’s are not eligible for the subsidy.
  • Your maximum COBRA coverage period will be 18 months from your original loss of coverage date.
  • You may not elect subsidized COBRA if you are eligible for coverage under another group plan, (including your spouse’s plan) or Medicare.
  • If your adjusted gross income is less than $125,000 if single, or $250,000 for a married couple filing jointly, you will be entitled to the full subsidy.  It phases out for incomes above these limits.
  • Domestic partners are not eligible for the subsidy.

This is merely an interpretation of the information currently available and is subject to change.  As further administrative details become available, we will update this posting.  If you have other questions or concerns, please contact us at


Department of Labor website link

for more detailed information


Internal Revenue Service

Employer COBRA information


Update: April 16, 2010

Congress has once again passed legislation that will extend the COBRA premium reduction under ARRA to individuals who were involuntarily terminated from employment from April 1, 2010 through May 31, 2010. No further information has been released at this time. We will notify you as soon as additional guidance has been issued on new notification requirements.

Update: March 2, 2010

The Temporary Extension Act of 2010 was signed into law on March 2, 2010, extending the premium reduction under ARRA to individuals who were involuntarily terminated from employment March 1, 2010 through March 31, 2010.  Assistance Eligible Individuals (AEIs) will continue to receive a 65% subsidy for a maximum of 15 months, unless they become eligible for other group coverage or Medicare, or the maximum COBRA period ends first.

New rules apply for individuals who lost coverage due to a reduction in hours between 9-1-08 and 3-31-10 then were involuntarily terminated from employment on or after 3-2-10 through 3-31-10.  We are waiting for clarification from the Department of Labor, at which time we will be posting more information regarding this class of qualified beneficiaries.


Update: December 21, 2009

Legislation extending the ARRA COBRA premium subsidy program has passed both the House and the Senate and was signed by President Obama on December 21, 2009. What does this mean for COBRA participants who qualify as “Assistance Eligible Individuals?”

Extended eligibility period to 2/28/2010

The subsidy program now covers individuals becoming eligible for COBRA due to involuntary employment termination on or before Feb. 28, 2010. It is unclear whether an individual who is involuntarily terminated in February, 2010 and becomes eligible for COBRA continuation coverage March 1, 2010, will be eligible for the subsidy.

Longer subsidy period from nine to fifteen months

The subsidy period for assistance-eligible individuals (AEIs) – including anyone now receiving the subsidy – may last for up to 15 months instead of just nine months.

Subsidy Amount and Involuntary Terminations – stays at 65%

The subsidy amount remains at 65 percent, and eligibility is still limited to people losing health coverage due to involuntary employment terminations.

AEIs with exhausted subsidy periods  

Individuals who exhausted their nine-month subsidy period as of November 30, 2009 could receive the subsidy for another six months.  Individuals who dropped COBRA after their subsidy expired may retroactively elect COBRA back to December 1, 2009. These individuals must pay 35% of the full premium costs no later than 60 days after the date of enactment. Coverage will not be reinstated until payment is received. 

Anyone who continued COBRA and made higher premium payments after exhausting the subsidy would be reimbursed for the excess payments or given credits toward future premium payments.


Department of Labor website link

for more detailed information


Internal Revenue Service

Employer COBRA information