MMC, Inc. HR Tip Volume 2 Issue 1

January 2010

Update: COBRA Subsidy Extension

Written by: Kristy Kwan, Benefits and Retirement Plan Administrator

On December 21, 2009, President Obama signed into law the Fiscal Year 2010 Defense Appropriations Act, which extends the current nine month COBRA subsidy by six months to a total of 15 months. The Act also extends the eligibility time period for the subsidy through February 28th, 2010.

As a reminder, the original American Recovery and Reinvestment Act (signed back in February of 2009) required employers to subsidize eligible employee’s COBRA premiums by 65%. If you are a client whose benefits are administered by MMC, this 65% subsidy amount is paid by MMC and you do not incur any extra charges. MMC also assumes responsibility for notifying your eligible employees of their federal COBRA eligibility for the subsidy (and the subsequent subsidy extension). If, however, your group falls under Cal-COBRA regulations (less than 20 employees), then the medical carrier will notify your employees and administer their continuation/subsidy.

Only employees who were involuntarily terminated within the specified time frame (September 1, 2008 – February 28, 2010) are eligible. Eligibility terminates if the employee becomes eligible for another group plan or Medicare, or if the employee exceeds the 15 month subsidy time period. Employees who voluntarily quit or were involuntarily terminated for gross misconduct are not eligible. Employees whose modified adjusted gross income exceeds $145K ($290K if filing jointly) are also ineligible for the subsidy.

If you have any questions about the COBRA subsidy, please feel free to call the MMC Benefits Department at (800) 899-6624.

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