Labor and Employment Law: Current Developments

Only employees voluntarily terminated on or before December 31, 2009 (and after September 1, 2008) are eligible for the 65% COBRA subsidy. However, if an employee is terminated at any time in 2008 and becomes eligible for the subsidy, the employee is entitled to the subsidy for a full nine months, so long as he or she does not become eligible for Medicare or otehr group health insurance. Conseqeuntly, an employee discharged on December 31, 2009 will enjoy coverage for nine months into 2010.

Of course, if this recession and high rates of unemployment continue, there is a good change that Congress may extend the life of the COBRA subsidy beyond the end of 2009.

A common question among employers and employees is “what if I was laid off in prior to September 1, 2008” or what if I was laid off in prior to September 1, 2008 but COBRA benefits did not begin until my insurance coverage ended after September 1, 2008. The simple answer is that employees involuntarily terminated prior to September 1, 2008 are not entilted to any benefits under the ARRA COBRA subsidy.

For example, if an employee lost her job on August 31, 2008 at noon, she is ineligible for the subsidy. Similarly, an employee terminated in June 2008 whose employer provided health care coverage through December 2008 is not eligible for the subsidy. Both employees are eligible for COBRA coverage under the traditional rules–they simply must pay 100% of the premium.