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COBRA Premium Subsidy Scheduled to End December 31, 2009
Dec 16, 2009
With the end of the year quickly approaching, Aetna wanted to remind you that the American Recovery and Reinvestment Act of 2009 (ARRA) premium subsidy for COBRA and state continuation coverage is scheduled to end on December 31, 2009.
As communicated earlier this year, ARRA created a premium subsidy for COBRA and state continuation coverage for certain Assistance Eligible Individuals (AEIs) for up to nine months. In order to be eligible for the subsidy, AEIs must meet/have met all of the following criteria:
- The covered employee's involuntary termination of employment must occur on or after September 1, 2008 and on or before December 31, 2009
- Eligibility for continuation coverage must also occur on or before December 31, 2009
- The individual must not be eligible for coverage under another group plan or Medicare
- The individual’s modified adjusted gross income is not more than $125,000 (individual filer)/$250,000
Under current IRS guidelines, both the termination of employment and the eligibility for continuation coverage must occur on or before December 31, 2009 in order for the individual to be eligible for the premium subsidy.
For example, if an individual's employment is involuntarily terminated on December 31, 2009, then the individual will not be eligible for continuation coverage until January 1, 2010. Similarly, if an individual's employment is terminated on December 19, 2009 and the coverage continues to the end of the month (as some of Aetna's plans do), the individual will not be eligible for continuation coverage until January 1, 2010.
The individuals in both of the examples above will not be eligible for the premium subsidy because they will not be eligible for continuation coverage until January 1, 2010, which is outside of the required time frame set by the ARRA.
Individuals denied the premium subsidy may appeal the denial to the federal government.
Appeals to the Department of Labor must be submitted on the U.S. Department of Labor application form. The form is available at www.dol.gov/COBRA
and can be completed online or mailed or faxed as indicated in the instructions. If you believe you have been inappropriately denied eligibility for the premium reduction, you may wish to speak with an Employee Benefits Security Administration Benefits Advisor at 1-866-444-3272 before filing this form.
Congress is currently considering an extension of the subsidy beyond the program’s December 31, 2009 end date. If this occurs, employers will need to proceed in accordance with the terms of that extension. Aetna is closely monitoring the situation and if there are any changes or an extension to the subsidy law, Aetna will keep you informed as quickly as possible.
Visit the Department of Labor’s Frequently Asked Questions