3.5.10

On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (Act) that once again extended the eligibility period during which an involuntarily terminated individual could qualify for the COBRA subsidy originally created through the American Recovery and Reinvestment Act of 2009 (ARRA). The period during which you could qualify for the subsidy was originally set to expire on December 31, 2009, but was extended by the Defense Appropriations Act of 2010 until February 28, 2010. This period has again been extended by the Act to March 31, 2010.

The Act also amended the definition of Assistance Eligible Individual (AEI) to include an individual who experienced a reduction in hours between September 1, 2008 and March 31, 2010 and was later involuntarily terminated between March 2, 2010 and March 31, 2010. Prior to the Act, individuals who experienced a reduction in hours followed by an involuntary termination would not be eligible for the subsidy because their initial qualifying event was a reduction in hours and not an involuntary termination. This new class of AEIs must be provided an ARRA general COBRA notice within 60 days of the individual's termination. Their COBRA coverage date will begin on the date of the reduction in hours, however, premiums will not have to be paid for the period between the reduction in hours and the involuntary termination.

The Act also added a new penalty provision. Individuals or the Department of Labor can sue to enforce determinations made under the expedited review process. Additionally, failure to comply with the determination within 10 days of receipt will result in a penalty of $110 per day.

If you have questions about the Temporary Extension Act of 2010 or the COBRA subsidy generally, please contact Dana Thrasher (205-226-5464), Bob Ellerbrock (205-226-5462), Jay Turner (205-226-5468), or Dave Pearson (813-222-1367).

IRS Circular 230 Notice: Federal regulations apply to written communications (including emails) regarding federal tax matters between our firm and our clients. Pursuant to these federal regulations, we inform you that any U.S. federal tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by the addressee or any other person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

Constangy, Brooks & Smith, LLP has counseled employers on labor and employment law matters, exclusively, since 1946. A “Go To” Law Firm in Corporate Counsel and Fortune Magazine, it represents Fortune 500 corporations and small companies across the country. Its attorneys are consistently rated as top lawyers in their practice areas by publications such as Chambers USA, Super Lawyers, and Top One Hundred Labor Attorneys in the United States. More than 100 lawyers partner with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. Offices are located in Georgia, Florida, South Carolina, North Carolina, Tennessee, Alabama, Virginia, Massachusetts, Missouri, Illinois, Wisconsin, Texas and California. For more information, visit www.constangy.com.

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