Created 3/25/2009 COBRA Subsidy Program Congress passed the ARRA (American Recovery and Reinvestment Act) ARRA provides a federal subsidy (For up to nine months) to certain eligible individuals electing to receive COBRA benefits. ARRA also allows a second COBRA election choice for eligible individuals terminated between September 1, 2008 and December 31, 2009. Who is eligible for the subsidy? Assistance eligible individuals are those who are: - Eligible for regular COBRA between September 1, 2008 and December 31, 2009. - Were “involuntarily terminated” from employment during the time period. - DHRM has determined that “Resignation in Lieu of Termination” will be treated as involuntary for this COBRA subsidy. - Individuals who terminated employment of their own accord are not eligible for the subsidy. How long does the subsidy last? The subsidy lasts a maximum of NINE months. For PEHP plans, those eligible for the subsidy now, will begin the period on March 1, 2009, and unless the employee terminates coverage sooner, will end on November 30, 2009. How much is the subsidy? Subsidy is 65% of the rate. Employee must pay 35% of the required rate. How it works. - Individuals that were “involuntarily terminated” after September 1, 2008, but did not elect COBRA, have another opportunity to elect COBRA beginning March 1, 2009. - This new election will not extend benefits beyond the normal 18 months of a COBRA qualifying event. - PEHP will provide eligible individuals notice of the opportunity to elect COBRA. EXAMPLES • Person A is involuntarily terminated on September 1, 2008, and elects COBRA. Person A will be eligible to pick up the subsidy beginning March 1, 2009, through November 30, 2009. Person A’s COBRA will end on March 31, 2010. • Person B is involuntarily terminated on September 1, 2008, but does not elect COBRA. Person B will have another opportunity to elect COBRA as of March 1, 2009, through November 30, 2009. Person B’s COBRA benefits will end on March 31, 2010, 18 months from the qualifying event. • Person C is “involuntarily terminated” on December 31, 2009. Person C qualifies for subsidized COBRA for nine months until September 30, 2010. Person C’s COBRA will terminate on June 30, 2011.
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