COBRA Extends Health Insurance Continuation Premium Subsidy

As part of the Defense Appropriation Act for 2010, the 65% subsidy for COBRA continuation premiums has been extended up to 15 months for eligible employees. The subsidy was previously limited to 9 months. Eligible workers will pay only 35% of their premiums to their former employers. To qualify, a worker must have been involuntarily separated between September 1, 2008 and February 28, 2010. This only applies to employees who are employed with a company that maintains more than 20 employees and has previously provided health insurance coverage. Also keep in mind the 65% subsidy is reimbursed to the coverage provider through a tax credit in most situations.

In Ohio, state continuation coverage is also available under Ohio’s “mini-COBRA” program. If an employee has less than 20 employees, those employees can receive continuation coverage under the state continuation law rather than the federal law. Coverage under the state’s program has been extended up to 12 months and no longer requires proof of entitlement to unemployment compensation in order to be eligible. As long as the employee can show that they were involuntarily terminated and for reasons other than gross misconduct, they are eligible. The small employer will not be obligated to pay any portion of the premium. The former employee will pay 35% of the premium and the insurance company will claim the credit from the IRS for the 65% subsidy of the premium not paid by the former employee.

Therefore, employees of both small and large employers have additional assistance available to them for extending health insurance coverage during these hard times. Please consult your counsel if you have any questions concerning an employee’s eligibility or any further extension of benefits.

Author: Charlie Smith