From the April 2010 issue ofConsumer Driven.

To work in the arena of COBRAadministration without good legal advice is like going into apitch black room, swinging a stick and hoping to hit the lightswitch. In this rapidly changing area, the key to success is accessto accurate and timely legal information. And when that informationis being disseminated by the IRS or Department of Labor, it helpsto be as close to those entities as possible.

When the American Recovery and Reinvestment Act became law onFeb. 17, 2009, it provided a 65 percent subsidy of COBRA premiumsfor up to nine months for anyone who experienced an involuntarytermination on or after Sep. 1, 2008, and on or before Dec. 31,2009. Employers then proceeded to experience roughly double thenumber of those electing COBRA continuation. A rash of long nightsand headaches broke out throughout the ranks of some COBRA softwarevendors and administrators. We urged caution, kept our ears onCapitol Hill and advised clients every step of the way.

On Dec. 19, 2009, the Department of Defense Appropriations Actof 2010 extended the eligibility to qualify for the subsidy by twomonths – until February 28, 2010 and also added six months ofsubsidy for a total of up to 15 months. At this point, a lot ofadministrators started to think, “Oh my God, how do I get out ofCOBRA?!”

And many did.

But many other administrators saw the opportunity amid thechaos. Suddenly, it was “Oh my God, we gotta get into COBRA.” Thosealready administering COBRA took a deep breath, clung to theirlegislative and technical partners and methodically addressed thenew subsidy with an even cooler head then during the first subsidy.And their books of COBRA business grew immensely.

And then came talk of another extension of the COBRA subsidy.But not before the politicians got to have their time on CSPAN. Avote on the one-month stop-gap extension was delayed for four daysby U.S. Sen. Jim Bunning, R-Ky. Bunning insisted there be adiscussion of how to fund the subsidy (What a novel idea). However,rational Bunning's stance, the fact of the matter was that thisholdup was also holding up unemployment benefits and that was notconsidered politically popular by either party. After making hispoint, Bunning relented and TEA passed on March 2.

Technically, TEA extended the qualification for COBRA subsidyfor involuntary terminations until March 31. Previously, thecut-off date was March 28. The number of subsidized months remainsat 15 months. And those qualified to be treated as an assistanceeligible individual now include anyone who experienced a qualifyingevent of reduction of hours on or after 9/1/08 and subsequentlyexperience an Involuntary Termination on or after March 2, 2010(enactment date of HR 4691 Extension) through March 31.

If the individual is not currently on COBRA, whether theyoriginally elected and subsequently had their COBRA terminated orthey never elected, they will now have a second chance opportunityto elect COBRA. Their 18 months of COBRA will be calculated fromthe original QE date for the Reduction of Hours. Similar to theoriginal ARRA enactment, there will be some who will have a gap incoverage.

By now, well-informed vendors and administrators have settled toa calm and cool approach to subsidies. The long nights andheadaches are all but gone. That's not to say getting here has beeneasy. During the last COBRA extension, I personally presented sixdifferent Webinars over a two-day period, each of which wasdifferent due to new clarifications and discussions by Alston &Bird with the DOL and IRS. They literally got the information fromthe horses' mouths.

We often joked it was coming from the other end of the horse,but all in all, the IRS and DOL have done a great job. As I impliedearlier, COBRA law can be a dark and lonely place. If you don'thave good legal counsel, you probably aren't in COBRA. If you arethinking about getting into COBRA, take my advice, “Don't go inthere alone.” Get with partners that are proficient in the law andprosper where others fear to tread.

More COBRA subsidy coverage from BenefitsPro

• Goodbye,COBRA subsidy
• COBRAsubsidy falls short
• A brokers' guide to COBRA changes
• COBRA enrollment remains high after subsidy ends
• President OKs COBRA subsidy through May