Signed into law on March 2, 2010, this bill temporarily extends the 65% subsidy for COBRA continuation premiums, which was available for up to 15 months for workers who were involuntarily terminated between September 1, 2008 and February 28, 2010. Former employees pay 35% of their health insurance premiums, while the former employer pays 65%. The employer is then reimbursed by claiming a credit on Form 941. AGI limitations apply.

The new law extends this subsidy from February 28, 2010 to May 31, 2010. The new law also makes a clarification regarding COBRA continuation resulting from a reduction in hours. Under the new rule, if an individual loses group coverage due to a reduction in hours, and later is involuntarily terminated, the individual may now qualify for the COBRA subsidy. See the link above to Public Law 111-144, Section 3 for details.