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The American Recovery and Reinvestment Act of 2009 (ARRA), as amended on December 19, 2009 by the Department of Defense Appropriations Act, 2010 (2010 DOD Act) extends the eligibility period for the COBRA premium reduction for an additional two months (through Feb. 28, 2010) and the maximum period for receiving the subsidy for an additional six months (from nine to 15 months). In addition, individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have an extension of their grace period to pay the reduced premium. To continue their coverage they must pay the 35 percent of premium costs by February 17, 2010, or, if later, 30 days after notice of the extension is provided by their plan administrator. Individuals who lost their subsidy and paid the full 100 percent premium in December 2009 should contact their plan administrator or employer sponsoring the plan to discuss a credit for future months of coverage or a reimbursement of the overpayment.

For additional information, visit www.dol.gov/cobra to access information on new notice requirements, updated guidance, fact sheets, and frequently asked questions.

Many New Jersey employees work for employers that are not subject to COBRA because the employer employs fewer than 20 employees. New Jersey law (N.J.S.A. 17B:27A-27) provides for continuation that is comparable to COBRA and thus the ARRA applies to employees of New Jersey small employers as well. Except as identified below, ARRA applies to New Jersey Continuation under group coverage issued to New Jersey small employers in the same manner that it applies to COBRA continuation coverage and the information as it pertains to COBRA would apply.

For employer groups subject to New Jersey Continuation, the carrier is required to send a notice to terminated employees so that the former employees whose employment was/is terminated between September 1, 2008 and February 28, 2010 can request the premium reduction. This is different than for COBRA eligible groups where the employer is required to send the notice.

The model notices that were released by the U.S. Department of Labor on March 19, 2009 are available on the agency’s web site (www.dol.gov/ebsa/COBRAmodelnotice.html).

Employees who are involuntarily terminated between February 17, 2009 and February 28, 2010 must elect New Jersey Continuation within 30 days after the date coverage ends. The premium reduction must be elected at some time during the fifteen month period for the premium reduction. Since carriers can only send notice of the premium reduction to the former employees to the extent the employer has notified the carrier of the termination it is imperative that employers provide the carrier with timely notice of an employee’s termination.