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COBRA Subsidy Extended Through March 31, 2010 |
| Yesterday we advised our clients and friends of the expiration of the COBRA subsidy, effective March 1, 2010. We also advised that we expected the Senate to pass an extension of that subsidy soon. Last night, the Senate passed and President Obama promptly signed into law a stopgap measure to extend unemployment benefits, including the COBRA subsidy through March 31, 2010. This means that employees involuntarily terminated through March 31, 2010, remain eligible for the COBRA subsidy. While you might be inclined to act on this new legislation, we still recommend a wait and see approach. First, the COBRA notices that are in your possession now and currently authorized by the Department of Labor show that only involuntary terminations through February 28, 2010, are eligible for the subsidy. Sending out that notice would be a misleading communication. DOL will have to implement new notices explaining the extended eligibility period. Second, as of the writing of this Advisory, DOL has not commented on whether it intends to issue a new notice. We think DOL may be inclined to wait a while, as the Senate continues to debate legislation that would extend the COBRA subsidy to involuntary terminations through December 31, 2010. Rather than issue a notice today, extending coverage through the end of the month, and then potentially having to issue another replacement notice next week that extends coverage through December 31, DOL may simply delay issuing notices until the future of the current Senate bill is clearer. Congress could pass the December 31 extension as early as this week. In the absence of DOL guidance, employers have two compliance options for now: (1) Continue to follow LMV's advice from yesterday: wait ten days until the path of the current Senate legislation is clearer and we know whether (more likely when) DOL will issue revised notices; or (2) Go ahead and provide the current COBRA notices to terminated employees and provide a cover letter advising them that the President recently signed a bill extending coverage under the COBRA subsidy program to involuntary terminations occurring between March 1, 2010 and March 31, 2010, and that they should substitute "March 31, 2010" for all references to "February 28, 2010" shown on the notice. We continue to recommend the first option, a holding pattern. Of course, we continue to stay out in front of this developing law because we know our clients want to stay compliant, provide reliable information to terminated employees, and reduce the frustration and confusion associated with administering this program. Please stay in touch with your LMV attorneys and be alert to another Employment Law Advisory from us once the COBRA subsidy extension issue is clarified. If you have questions, please contact your LMV attorney at (205) 326-3002. |
