Employers face COBRA subsidy transition issues

Question: A former employee on COBRA, who exhausted his nine months of COBRA subsidy on November 30, 2009, dropped his spouse’s coverage at our December open enrollment and switched to a less expensive plan. Now that he has been notified that he’s entitled to six more months of COBRA subsidy he wants to go back to the coverage that he and his spouse had. Do we have to allow him to switch back?

Answer: The Department of Labor (DOL) says yes. Informally, the DOL has stated that you must allow an assistance eligible individual (AEI) to go back to the coverage he would have had, had he known about the recent subsidy extension that was part of the Department of Defense Appropriations Act, 2010. This AEI and his spouse are also entitled to extra time to pay those retroactive premiums. For more information, see Vigilant’s Legal Guide, “COBRA Provisions of the American Recovery and Reinvestment Act of 2009” (6015). And stay tuned for more on the COBRA subsidy—there is legislation introduced in Congress that, if passed, would extend the COBRA subsidy eligibility and would create more transition and notice issues. Vigilant will keep members informed.