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President Obama Signs Additional COBRA Subsidy Extension

Publisher: Day Pitney Alert
March 9, 2010
Day Pitney Author(s) Kathy A. Lawler

On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 ("TEA"), which further extended until March 31, 2010, eligibility for the reduction of COBRA health premiums originally enacted as part of the American Recovery and Reinvestment Act of 2009 ("ARRA"). ARRA initially provided that assistance-eligible individuals who experienced an involuntary termination of employment between October 1, 2008, and December 31, 2009, could elect to continue their health benefits pursuant to COBRA for up to a nine-month period by paying only 35 percent of their COBRA premium. In December 2009, the Department of Defense Appropriations Act 2010 extended until February 28, 2010, the date by which an involuntary termination of employment had to occur to permit assistance-eligible individuals to take advantage of the ARRA premium reduction and extended the length of the time period during which the premium reduction would apply from up to nine months to up to 15 months. The TEA provides an additional one-month extension of the date by which the involuntary termination of employment has to occur. Pending legislation would further extend the period through December 31, 2010.

The TEA also makes the ARRA subsidy available to a new group of employees. Under the TEA, an employee who was initially entitled to COBRA continuation coverage as a result of a reduction in hours at any time after October 1, 2008, and who is involuntarily terminated on or after March 2, 2010, but by March 31, 2010, may elect COBRA coverage, subject to the ARRA premium reduction. The maximum length of time COBRA continuation coverage is available will be measured by the initial qualifying eventĀ - the reduction in hours. The individual will not be required to elect COBRA coverage for the period between the initial qualifying event and the date that his or her employment is terminated. Affected employees must be notified of their right to take advantage of the ARRA premium subsidy during the 60-day period following their termination of employment. Watch the Department of Labor's Employee Benefits Security Administration COBRA webpage at for further updates regarding the new TEA requirements.