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COBRA Subsidy Extended to March 31, 2010 [Temporary Extension Act of 2010]

Posted By Eve Framinan, Saturday, March 06, 2010

COBRA Subsidy Extended to March 31, 2010

The White House has confirmed that President Obama signed H.R. 4691, known as the "Temporary Extension Act of 2010" into law on Tuesday, March 2, 2010. The bill takes effect immediately.

Prior to the enactment of this bill, COBRA premium assistance was not available to anyone terminated after Feb. 28, 2010 due to the expiration of the previous extension. The Temporary Extension Act of 2010 will immediately allow those who experience an involuntary termination of employment through March 31, 2010 to be treated as an assistance-eligible individual for purposes of the COBRA premium assistance.

The law also changes the eligibility to receive premium assistance for those who have experienced a reduction in hours followed by a termination of employment. In order to be considered an assistance-eligible individual, an employee must have experienced a reduction in hours between Sept. 1, 2008 and March 31, 2010. However, the termination of employment must have occurred on or after March 2, 2010.

Individuals affected by both 1) a reduction of hours between Sept. 1, 2008 and March 31, 2010 and 2) termination of employment on or after March 2, 2010 are required to receive a notice informing them of the opportunity to apply for the subsidy. The application for the subsidy must be completed by the later of May 1, 2010, 30 days after the notice was provided to the former employee, or by the end of the applicable grace period. The law also clarifies that no payment is required for COBRA coverage between the reduction in hours and the involuntary termination of employment.

The law also authorizes the Secretary or an affected individual to bring a civil action against the plan sponsor or health insurance issuer, as well as assess a penalty up to $110 per day for failure to comply within 10 days of a determination of eligibility as an assistance eligible individual.

This material was created by NFP, its subsidiaries, or affiliates for distribution by their Registered Representatives, Investment Advisor Representatives, and/or Agents. This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP Securities, Inc. nor NFP Benefits Partners offer legal or tax services. The information contained in this edition is issued for informational purposes only and has been collected from regulations, statutes, laws, court decisions and administrative rulings and should not be viewed as interpretation or relied upon as legal or tax advice. This information is known to be current as of the initial date of distribution. Please note that changes to the legislation, regulations, statutes, policies, etc., may have occurred and are not reflected herein.

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Tags:  cobra  H.R. 4691  involuntary termination  temporary extension act of 2010 

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