The ARRA provides a subsidy for “COBRA continuation coverage,” which is required for “group health plans.” This is the kind of COBRA coverage with which most employers are familiar. Persons enrolled both in plans covered through group insurance policies and those self-insured are eligible for the subsidy. Health Reimbursement Arrangements (HRA’s) are also covered.
The subsidy is not available for Flexible Spending Accounts (FSA) or Cafeteria Plans.
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.
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Labor and Employment Law: Current Developments 