The COBRA subsidy is and will be affected by certain dates from now until the end of 2009:

• For subsidies that began as of 3/1/2009 – the original subsidy date for most employees who terminated employment during the 9/1/08 to 2/16/09 retroactive window – the subsidy will end with November’s coverage.  The subsidy is only for 9 months.  Note, that COBRA entitlement without subsidy will continue to extend through the applicable COBRA period measured from the qualifying event.

• For subsidies that apply to COBRA that began after 3/1/09, the subsidy continues for 9 months, even if that period extends beyond 12/31/2009.

• In order for the subsidy to apply, both the qualifying event (involuntary termination) and COBRA commencement must occur on or before 12/31/09.

• The DOL and IRS have informally taken the position that if the last day of active coverage is 12/31/2009, then COBRA does not begin until 1/1/2010 and therefore the subsidy does not apply.  If your plan extends coverage through the end of the calendar month of termination (a common provision in most insured coverages), this means that terminations occurring in December will not be entitled to the subsidy.  While this may seem counterintuitive to the purpose of the subsidy, it has become the generally accepted understanding of the DOL’s and IRS’ positions.

• The DOL and the IRS have indicated that they may issue specific guidance on this matter before year end, but that does not mean that they will reverse their view.

• There are bills before Congress that would extend the subsidy to terminations occurring in 2010 and would also extend the duration of the subsidy.  While there is general support in Congress for these measures, it is not clear whether they will pass.  Even if this kind of legislation is passed, it may not happen until the New Year, and may require retroactive application.