President Obama Signs H.R. 4691 Extending Unemployment and ARRA COBRA Subsidy Benefits Through March 31, 2010
*By Patrick J. Hoban

On March 2, 2010, President Obama signed H.R. 4691 – the “Temporary Extension Act of 2010” (the “Act”) into law. The Bill, which became Public Law 111-144, provides short-term extensions of several authorities, including those related to: (1) unemployment compensation; (2) ARRA COBRA premium subsidies; (3) Medicare physician payments; (4) Medicare therapy caps; (5) surface transportation programs; (6) flood insurance programs; (7) retransmission of television broadcasts; (8) Federal poverty guidelines; and (9) Small Business Administration loan guarantees.

In addition to extending the ARRA COBRA premium subsidies to individuals who become eligible through March 31, 2010, the Act clarifies the eligibility of individuals who lose group health insurance coverage due to the reduction in hours of an employee. The Act specifies that the loss of group coverage due to a reduction in hours only triggers eligibility for COBRA continuation coverage but not the ARRA COBRA subsidy. However, an individual who loses group coverage due to a reduction in hours and is later involuntarily terminated is entitled to elect ARRA COBRA coverage at the time of his or her involuntary termination.

Importantly, per the “clarification” set forth in the Act and as confirmed by the Employee Benefits Security Administration (“EBSA”), the total period for COBRA continuation coverage eligibility (with or without the ARRA premium subsidy) initially extends for 18 months from the triggering event (i.e., loss of group coverage due to an hours reduction or termination of employment). Currently, the ARRA COBRA premium subsidy extends for 15 months from the date of involuntary termination. However, EBSA has confirmed that the ARRA COBRA premium subsidy does not extend the period of COBRA continuation entitlement. Thus, when a covered individual loses group coverage due to a reduction in hours, the clock starts ticking on his or her COBRA continuation eligibility. If that employee is later involuntarily terminated, he or she will be entitled to elect the ARRA COBRA premium subsidy but that election will not extend the period of COBRA continuation coverage to which he or she is entitled.

Although the Act only extended the ARRA COBRA premium subsidy to eligible individuals through March 31, 2010, there are currently two bills pending in the U.S. Congress that would extend the premium subsidies through June 30, 2010. Employers should expect Congress to take further action on COBRA within the month.

*Patrick J. Hoban, practices in all areas of labor and employment law, with a focus on private and public sector labor law. If you have any questions about this legislation or other ARRA COBRA or COBRA issues, contact Pat Hoban at pjh@zrlaw.com or 216.696.4441.

This newsletter is not intended as a substitute for professional legal advice and its receipt does not constitute an attorney-client relationship. If you have any questions concerning any of these articles or any other employment law issues, please contact Stephen S. Zashin at 216.696.4441.
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